Throughout the years, currency has changed and become different to what it is in the modern age. The item that you hold has changed from the origins of currency when commerce was the trade in livestock and tools.
Initially, people purchased products or services with other services and products. A blacksmith might pay for his food and ores by creating tools and weaponry; a baker could pay their workers in bread, etc.
Times moved on and commodities, precious metals and stones began to be used as currency. Currency as a concept continued to evolve as these precious metals and stones were refined into something more recognisable as money today.
Currency became coins, made from precious metals which were then exchanged for goods or services. Often, the ‘royal mint’ would become the official currency of a country showing that it was the official money recognised by the treasury of the king or queen.
Money was easier to carry as coins in bags and pouches rather than trading in items, services or livestock. Convenience became key to the trade, but this too would evolve.
Soon currency moved to ‘promise’. Instead of the valuable metals used in the coin, paper notes or simple metal coinage was created with the ‘promise’ of money and the actual money or, gold, was saved in establishments such as banks. These formed the basis of modern coinage, most with artwork of historical figures and designs related to the country.
In the case of the UK, these notes and coins offer the promise from the bank of England (or, what used to be, the royal treasury in days gone by) to pay out a sum of gold equivalent to the promise on the coin or note. The words “I promise to pay the bearer on demand the sum of five pounds” come from a time when the English notes represented deposits of gold. At that time, a member of the public could exchange banknotes for gold to the same value. For example, a £5 note could be exchanged for five gold coins, then called sovereigns.
These days the promise of money is based on a trust in the banking system and country. Whereas up until 1855, the Chief Cashier of the Bank of England used to have to write the note in hand and sign it plus fill in the payee’s name, similar to a modern-day cheque, nowadays notes are printed on a standard mass scale and money is guaranteed by the government.
The global economy now mixes and no longer is truly independent. The value of money fluxes and flows as the world changes and establishments rise, fall and evolve. Your money has a long history behind it and it has taken a long time to get to this point where credit and promise are valued as highly as a gold sovereign used to be.