Money can be exchanged for goods and services because it is accepted as an exchange means for different products.


Money’s primary function is being a means of exchange for people to be able to get goods and services desired. Before the invention of money, people used to barter, but this process lacked transferability and made the process of getting the necessities inconvenient. To solve the problems, which were bartering implied, as economies grew, people turned to commodity money.

Commodity money is a term used to define something precious but commonly accepted as currency. If during early bartering period the goods, which were exchanged by people, were somehow useful, commodity money was not necessarily useful; it was just wanted by people because it is accepted that it has value. Not only commodity money could be exchanged for goods and services, but it also used to back currencies as well.

Commodity money was a good alternative for bartering and made it easier for people to get what they needed, but with time it also became less convenient, and fiat money appeared. Fiat money simplified the process even more and made it possible to set prices and take fiat money for goods and services. Until the 1970s, gold and silver, which were the most common commodity monies, were kept in banks and could be exchanged for a certain amount of fiat money.

However, fiat money does not have any intrinsic value, and now there is no other valuable backing it. Now it is surprisingly easy how money can easily be exchanged for goods and services.

In order to get something for money in the modern world, the amount of money should be specific to the prices of a particular product. Unlike bartering, when people had to find something specific that the other person wanted to get a necessary product from that person, now fiat money is universally accepted. When people work, they earn money, and the only condition of getting a desirable sort of goods or services is to have enough money to pay for it.