Throughout history, money has taken different forms. Today, paper money is very common, as these bills from different countries show.
Why is a dollar bill valuable? After all, you can’t eat it. You can’t wear it. It’s just a piece of paper. But you can trade dollars for things that you can eat or wear. The bills are worth something because everyone agrees that they have value.
Once people started trading metals as money, coins were soon invented. A Turkish kingdom called Lydia made the first metal coins around 600 bc. The coins were stamped with the king’s seal. About the same time, people in China began to use paper money.
In the past, paper money often stood for a precious metal like gold. You could go to the government or a bank and trade your paper bills for actual gold.
Today, in most countries, you can’t trade paper money for precious metals. People accept it because they have confidence everyone else will accept it, too.