Money can be described as a token which is used in our society to settle debts and to pay for the services and commodities which are provided to us. In other words, money is the medium of exchange in our society which has also been accepted by the law. There are several types of money varying in liability and strength.
The society has modified the money at different types and in this way several types of money are introduced. When there was ample availability of metals, metal money came into existence later it was substituted by the paper money. At different times, several commodities were used as the medium of exchange. So, it can be said that according to the needs and availability of means, the types of money has changed.
Some of the major types of money are:
Commodity Money
Whenever any commodity is used for the exchange purpose, the commodity becomes equivalent to the money and is called commodity money. There are certain types of commodity, which are used as the commodity money. Among these, there are several precious metals like gold, silver, copper and many more. Again, in many parts of the world, seashells (also known as cowrie sells), tobacco and many other items were in use as the mediums of exchange.
Fiat Money
The word fiat means the command of the sovereign. It is the type of money that is issued by the command of the sovereign. The paper money is generally called as the fiat money. This type of money forms a monetary standard. It has been made mandatory by law to accept the fiat money, as an exchange medium, whenever it is offered to anyone.
Fiduciary Money
Today's monetary system is highly fiduciary. Whenever, any bank assures the customers to pay in different type of money and when the customer can sell the promise or transfer it to somebody else, it is called the fiduciary money. Fiduciary money is generally paid in gold, silver or paper money. There are checks and bank notes, which are the examples of fiduciary money because both are some kind of token which are used as money and carries the same value.