Before money was introduced, people relied on bartering to acquire services and goods. Bartering is not an efficient way of trading goods and services, as it relies on luck to find a good match among the trading parties. To overcome this issue, items that were useful to everybody, such as cattle, sheep, vegetables, and grain were used as the medium of exchange. Suppose a fisherman needs to see a doctor. The fisherman can first go to a market and sell fish for cattle. Then, the fisherman brings the cattle to the doctor's practice to pay for healthcare services.

Using cattle as a medium of exchange is not ideal. In the preceding example, after having sold the fish, the fisherman may not immediately need a doctor's services and may not need to buy other goods. The fisherman has to feed the cattle and keep them alive for future payments. Given that the fisherman...