The History of Coin Currency
Coin currency was first used for money in Mesopotamia and Egypt around 4500 years ago. At first, precious metals such as gold and silver were traded as little lumps of electrum (a natural alloy of gold and silver). Eventually, the royal mint began to create smaller, rounder versions of these lumps of electrum which had a set weight and value that was marked by the issuer. This was the beginning of coins as we know them today.
In ancient times, a coin’s value was established not just by its metal content, but also by its design and legend. The first inscribed coins were probably tokens or badges minted under the authority of individuals and carried their name, such as Phanes of Ephesus, whose inscription read “PHAENOS EMI SHMA” (“I bear the sign of Phanes”). Later, most coins were state issues of various empires and were backed by some form of national guarantee.
Modern coins are almost always made of a metallic base and have a face value that is a representation of the national currency. The front of a coin usually features the monarch or head of state while the reverse often shows a symbol or image of the country. The space around the main design on a coin is called the exergue and is sometimes left blank or contains a privy mark, mint mark, or other decorative or informative design feature. Some coins are bimetallic and contain both gold and another metal such as copper or nickel.
Some coins are dated and may have a small legend indicating the year of production or other important information, while others have no date at all. In addition, coins can have special designs for commemorative purposes. These include a bicentennial one cent coin celebrating the Lincoln Bicentennial, the Westward Journey Nickel Series, and the America the Beautiful Quarters Program.
Most of us don’t think much about how pennies, dimes, and quarters make their way into the hands of retailers and into our wallets and pockets. But the Federal Reserve and other central banks think about this all the time, as they balance a need to get more coins into circulation with the need to ensure that the coins can be easily used.
The COVID-19 pandemic has slowed the flow of coins through the economy, as many people stopped shopping at stores and dropped their change into change sorters in bank lobbies or into washing machine coin slides at laundromats. The Federal Reserve is doing what it can to encourage coins back into the system, including capping coin orders and convening a Coin Task Force comprised of the Fed, armored carriers, banks, and other industry representatives.
Cryptocurrencies are a new form of digital money, and they are gaining in popularity worldwide. Proponents say cryptocurrencies are a democratizing force that wrests power away from central banks and Wall Street. Critics, however, point out that cryptocurrencies are volatile and prone to extreme price fluctuations.