Before money existed, people had to use the barter system to exchange their products
and services. Barter meant the direct exchange of goods. Later people developed a more practical system of exchange. They used commodity money – goods which members of the society recognized as having value. They were for instance: cattle, skulls, feathers, shells, salt, wine, elephant tusks, tobacco, etc. Precious metals, especially gold and silver, gradually took over because they had the basic equlities that money should posses: divisibility, durability, homogeneity, they were in limited supply, and counterfeiting was extremely difficult. Nowadays notes and coins are given denominations by the government irrespective of their metal content or precious metal backing. This money officially declared by law, is called fiat money.