The earliest form of money was physical money, such as shells, sheep, rabbits and so on. Then metal currencies appeared, including copper coins, nickel coins, silver dollars and gold coins. Metal money is made of real metal and gold and silver are scarce. With the continuous increase of commodity production and social wealth, it is not enough to use all gold and silver as exchange tools. As a result, alternative currency appeared and further developed into today's credit currency.

I. Currency

1, money is essentially a contract between owners about exchanging rights, and different forms of money are essentially unified. In the past, due to people's unclear understanding of the nature of money, money was mistakenly divided into different types from different angles, such as: debt currency and non-debt currency according to the commodity value of money, [2] convertible currency and non-convertible currency according to whether the exchange ratio of precious metals was agreed.

2. Formally, according to the commodity value of money, it can be divided into physical money and formal money. Physical currency itself is a special commodity, including value, such as sheep and precious metals. Formal currency itself has no value, its value is agreed by contract, only the contract value. The two forms are different, but they are essentially unified, that is, they are both agreed as exchange media and have contractual value. The purchasing power of money depends on the contract value of money, but the purchasing power of physical money is also affected by its own commodity value. Usually, the commodity value of physical currency is less than its contract value as currency.

Second, the function of money.

1, because money is a commodity, it has the same use value and exchange value as all commodities. In different forms of value movement, money plays different roles: value scale, circulation means, payment means, storage means and world currency. Among them, value scale and circulation means are the basic functions of money. The other three functions are all derived from these two.

2. Means of circulation refers to the function of money as a medium of exchange in commodity circulation. Before the emergence of money, commodity exchange was a direct exchange of things, that is, commodities-commodities. After the emergence of currency, commodity exchange is carried out through the medium of currency, that is, commodity-currency-commodity. Here, money plays the role of medium in the exchange relationship between two commodities and performs the function of circulation means.