Throughout the history of civilization, transactions were done by barter. Trading grain for chickens, milk for bread etc. But how much milk for how many loaves of bread? What was their individual worth? So through necessity, a monetary system developed. This system was based on precious metals, or stones. Gold, silver, diamonds and the like became currency. This way every item offered for bartering had an equal value in gold or silver. This system worked with gold becoming the standard by which everything was based. This gave rise to governments that created monetary systems that were backed by gold. So currency backed by gold could be converted into another currency. This was done by figuring out how much gold each currency was worth, an
