Coins: Ancient

A coin is usually a piece of hard material, generally metal and usually in the shape of a disc, which is issued by a government to be used as a form of money. Along with banknotes, coins make up the cash forms of all modern money systems. more...

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Coins are usually used for lower-valued units, and banknotes are usually used for the higher values; also, in most money systems, the highest value coin is worth less than the lowest-value note.

Collecting coins

See Coin collecting and Numismatics for more information on the collecting of coins, bank notes, token coins and Exonumia.

The value of a coin

The market exchange value of a coin comes from its historic value, and/or the intrinsic value of the component metal (for example gold coins, silver coins or platinum coins).

However, in modern times, most coins are made of a base metal and their value comes strictly from their status as fiat money. This means that the value of the coin is decreed by government fiat rather than agreed by the people, which really makes it less a coin and more a token in the strictest sense.

To distinguish between these two types of coins, as well as from other forms of tokens which have been used as money, monetary scholars have defined three criteria that an object must meet to be a "true coin". These criteria are:

It must be made of a valuable material, and trade for close to the market value of that material.; It must be of a standardized weight and purity.; It must be marked to identify the authority that guarantees the content.;

By the above definition, the invention and first known usage of coins comes from the Kingdom of Lydia circa 643-630 B.C. Under three generations of Lydian kings, the money of Lydia gradually moved from being lumps of electrum (a naturally occurring alloy of silver and gold) to coins of a guaranteed weight and purity, marked with the seal of the King. True coins also developed very close to this time frame in both India and China.

In 1979 and 1980, a Chinese architectural team excavating the region surrounding the ancient kingdom of Loulan discovered some Mesolithic stone tools and coins (see Loulan: Modern Chinese Expeditions).

Coin debasement

Throughout history, governments have been known to create more coinage than their supply of precious metals would allow. By replacing some fraction of a coin's precious metal content with a base metal (often copper or nickel), the intrinsic value of each individual coin was reduced (thereby "debasing" their money), allowing the coining authority to produce more coins than would otherwise be possible. Debasement of money almost always leads to price inflation unless price controls are also instituted by the governing authority. Some consider a classic example of this phenomenon to be the behavior of price levels in the United States since 1964 (the last year circulating United States Coins were minted of 90 percent silver). Such debasement and inflation were not unique to the U.S. Virtually every other country debased their coinage too. The United Kingdom and other countries saw similar inflation during the same era. Furthermore, the silver coinage current in the first half of the 20th century was not necessarily "true coinage" by the definition above. For example, in 1960, the silver in a U.S. dime was worth less than four cents. Many countries have redenominated their currency as a means of making a currency system impacted by inflation more practical. A recent, but extreme example of this is Turkey, which redenominated its currency on January 1st, 2005. One new Turkish Lira is worth one million of the old Turkish Lira.

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