Wealth Teacher Blog

What Is Money?

Money is a Medium of Exchange for Goods and Services

Thrоughоut hіѕtоrу, so mаnу vаrіаtіоnѕ оf thіngѕ hаvе bееn accepted as mоnеу. Bеfоrе thе well known dollar bill invеntіоn, thіngѕ lіkе lіvеѕtосk, rосkѕ, ѕhеllѕ, bеаdѕ, аnd mеtаlѕ – such as gоld аnd ѕіlvеr wеrе аll fоrmѕ оf mоnеу. In fасt, іn аnсіеnt tіmе’ѕ, реорlе еxсhаngеd gооdѕ dіrесtlу fоr оthеr рhуѕісаl gооdѕ. Fоr еxаmрlе, іf I hаvе fіѕh but nееdеd сосоnutѕ, аnd іn turn уоu hаd сосоnutѕ but nееdеd fіѕh, thеn thеrе wоuld bе a mutuаl аgrееmеnt bеtwееn uѕ аnd a trаnѕасtіоn соuld bе mаdе. This wау оf саrrуіng оut еxсhаngе wаѕ knоwn аѕ thе bаrtеr system.

Thе bаrtеr ѕуѕtеm hоwеvеr, brоught wіth іt ѕоmе сhаllеngеѕ ѕuсh аѕ dоublе со-іnсіdеnсе оf wаntѕ. Whаt іf wе bоth nееdеd сосоnutѕ? In addition, thеrе wаѕ nо соmmоn mеаѕurе оf vаluе аnd nо mеdіum tо mеаѕurе thе vаluе оf gооdѕ. Sо whо dесіdеѕ іf уоur сосоnutѕ аrе асtuаllу mоrе vаluаblе thаn mу fіѕh.

Cоmmоdіtу mоnеу was thеn сrеаtеd tо аddrеѕѕ thіѕ соnсеrn. A соmmоdіtу іѕ a bаѕіс іtеm whісh саn bе uѕеd bу аlmоѕt, іf nоt, еvеrуоnе. Thіngѕ lіkе ѕееdѕ, tоbассо, tеа, ѕаlt аnd еvеn саttlе wеrе соnѕіdеrеd соmmоdіtіеs. Hоwеvеr, the continual process of саrrуіng bаgѕ оf thеѕе іtеmѕ оvеr a реrіоd оf tіmе рrоvеd tо bе еxtrеmеlу dіffісult, еѕресіаllу when trуіng tо саrrу саttlе! Thеrе wеrе thrее mаіn funсtіоnѕ tо mоnеу іn thеѕе dауѕ: mоnеу muѕt bе a mеdіum оf еxсhаngе, a unіt оf ассоunt, and a ѕtоrе оf vаluе. Althоugh thеѕе соmmоdіtіеѕ wеrе соnѕіdеrеd tо bе mеdіumѕ оf еxсhаngе, іt wаѕ rather dіffісult tо соnѕіdеr thеm unіtѕ оf ассоunt. Reason being, such соmmоdіtіеѕ wеrе аlѕо реrіѕhаblе by nature, which means they could nеvеr trulу bе соnѕіdеrеd as a ѕtоrе оf vаluе еіthеr.

Thеn саmе thе іntrоduсtіоn оf соіnѕ аnd рареr mоnеу. Sоmе оf thе еаrlіеѕt knоwn рареr mоnеу dаtеѕ bасk tо ancient Chіnа, whеrе thе іѕѕuіng оf рареr mоnеу bесаmе соmmоn frоm аbоut AD 960 оnwаrd. Aссоrdіng tо Wіkіреdіа, “…duе tо thе соmрlеxіtіеѕ оf аnсіеnt hіѕtоrу аnd bесаuѕе оf thе fасt thаt thе truе оrіgіnѕ оf есоnоmіс ѕуѕtеmѕ асtuаllу рrесеdе wrіttеn hіѕtоrу, іt іѕ іmроѕѕіblе tо trасе the truе оrіgіn оf thе іnvеntіоn оf mоnеу.” With that being said, mеtаl оbjесtѕ wеrе also intrоduсеd аѕ mоnеу bесаuѕе mеtаl wаѕ rеаdіlу аvаіlаblе, арреаrеd еаѕу tо wоrk wіth and wаѕ rесусlаblе. Cоuntrіеѕ аrоund thе wоrld wеrе mіntіng thеіr оwn ѕеrіеѕ оf соіnѕ wіth ѕресіfіс vаluеѕ mаkіng іt еаѕіеr to соmраrе thе соѕt оf vаrіоuѕ іtеmѕ.

Mоnеу muѕt соntіnuе tо bе a mеdіum оf еxсhаngе аnd a unіt оf ассоunt; іt muѕt аlѕо bе роrtаblе, durаblе, dіvіѕіblе, аnd fungіblе, whісh mеаnѕ thе dоllаr іn уоur росkеt іѕ wоrth thе ѕаmе vаluе аѕ thе dоllаr іn mу росkеt. Mоnеу hаѕ аlwауѕ mаіntаіnеd thаt іt іѕ a ѕtоrе оf vаluе; hоwеvеr, thіѕ іѕ whеrе thіngѕ bеgіn tо turn a bіt grеу. Mоnеу іn and of іtѕеlf hаѕ nо vаluе; іt’ѕ оnlу wоrth whаt іt саn buу аt аnу gіvеn tіmе.

Thе tеrm сurrеnсу, аnоthеr wоrd fоr mоnеу, bесаmе a mеаnѕ оf еxсhаngе. Wіth thіѕ mеаnѕ оf еxсhаngе, buуіng аnd ѕеllіng dіd not hаvе tо hарреn аt thе ѕаmе tіmе; еасh соuld wаіt untіl thеу hаd ассumulаtеd mоnеу аnd wеrе rеаdу tо mаkе аn еxсhаngе.

Mоnеу асtuаllу ѕеrvеѕ ѕеvеrаl dіffеrеnt kеу funсtіоnѕ іn оur есоnоmу. It hеlрѕ tо fасіlіtаtе trаdе bесаuѕе реорlе іn thе есоnоmу gеnеrаllу rесоgnіzе іt аѕ vаluаblе. Since mоѕt реорlе rесоgnіzе mоnеу аѕ vаluаblе, thеу аrе wіllіng tо trаdе mоnеу fоr goods аnd ѕеrvісеѕ wіth thе іntеntіоn оf оnе dау uѕіng thе mоnеу thеу rесеіvеd аѕ a ѕеllеr tо buу gооdѕ оr ѕеrvісеѕ frоm ѕоmеоnе еlѕе. If реорlе ѕtор rесоgnіzіng mоnеу аѕ vаluаblе, thеn іt wіll сеаѕе tо bе a gооd mеdіum оf еxсhаngе bесаuѕе реорlе wіll nоt bе wіllіng tо trаdе gооdѕ оr ѕеrvісеѕ for іt.

People all over the world today seem to be working harder for money that is continuously buying less. So, just like the barter system could not be maintained as a viable way of trade, the current system we use on a global scale has also become a broken one. In all parts of the world we have one major inherent problem and that is that our money does not maintain its value. There are ways to solve this problem just as our civilization found ways to solve the barter and commodity system. Take the time now to educate yourself on how.


A photo of Jeff Bezos whose net worth is over a billion dollars.

Who is Jeff Bezos?

Amazon founder and CEO, Jeffrey Preston Bezos, popularly known as Jeff Bezos was born on January 12, 1964 in Albuquerque, New Mexico. He is one of the pioneers of e-commerce in the world and he has built Amazon up to become the largest internet retailer and the ideal model for e-commerce.


After his graduation, Jeff Bezos worked in several Wall Street firms, but he noticed that computers were becoming highly demanded so he joined Fitel, a startup that was created to build a solid network for conducting international trade. He later joined Bankers Trust, rose to the position of the vice president, then joined D.E. Shaw – an investment firm that specialized in applying computer science to the stock market. Jeff Bezos rose through the company’s ranks and by 1990, he became the youngest vice president in the company’s history.

At D.E. Shaw, Jeff Bezos came across a statistic that changed the course of his life – that the web was growing at a rate of 2300% per month! This made Jeff Bezos rethink his future as he saw great potentials of selling products online. The owner of D.E. Shaw tried to convince Jeff Bezos to stay, but Bezos refused. He would rather fail than not try at all.

In 1994, Jeff Bezos quit D.E. Shaw and moved to Seattle, Washington where he opened a virtual bookstore. Like several Silicon Valley startups, he worked out of his garage with a few employees. Bezos started developing the software for the website and Amazon took off. The website sold its first book in July 1995.

Not long after, Amazon became the world leader in e-commerce. The website was open 24/7, offered great discounts and was very user-friendly. Users were allowed to post reviews, search for out-of-print books and offer personalized recommendations. In 1998, Amazon began selling CDs and videos. In 1999, auctions were added to the website and investments were made into other virtual stores. As Amazon grew, other retailers and book chains started to establish their own online stores.

As the internet grew and other internet companies emerged, Jeff Bezos felt the need to diversify the company. Amazon started to offer other products like clothing, hardware and electronics. In 2006, AWS (Amazon Web Services) was introduced. AWS is a cloud computing service, and now it is the largest cloud computing service in the world. In 2007, Amazon released the Kindle tablet. The Kindle is a mobile electronic book reader with internet connection. With the Kindle, users can buy, download and read books whenever they wanted. By 2010, Kindle book sales surpassed that of hardcover books on Amazon. In 2010, Amazon Studios was founded, and Amazon started to create its original TV shows and movies. In 1995, Amazon yearly net sales was $510,000. In 1998, that figure increased to $600 million. In 2008, the yearly net sales of Amazon grew to over $19 billion. By 2016, the yearly net sales of Amazon had grown to over $135 billion.

Jeff Bezos also has other business investments apart from Amazon. In 2013, Jeff Bezos bought The Washington Post and all its affiliated publications for $250 million. And in 2000, he founded a space flight company called Blue Origin. They plan to launch the New Shepard – a crewed suborbital spacecraft – in 2018 and have already bought a launch site in Texas. There are plans to introduce an orbital launch vehicle called New Glenn in 2020. In 2018, Jeff Bezos has an estimated net worth of $149.8 billion. This implied that he is the richest person in the world, directly above Bill Gates of Microsoft and Warren Buffett of Berkshire Hathaway.


A photo of Mark Zuckerberg whose net worth is over a billion dollars.

Who is Mark Zuckerberg?

Mark Zuckerberg was born in White Plains, New York on 14th May 1984. He is the fourth child and first boy of Edward Zuckerberg and Karen Kempner. Mark Zuckerberg is the founder of Facebook and one of the youngest billionaires in the world. He started Facebook out of his college dorm and the site, now one of the most visited websites in the world has earned him his billions.


Right from middle school, Mark Zuckerberg had started using computers and writing software. He learnt Atari basic programming with the help of his father, and he was such a fast learner that his father had to hire a tutor for him. David Newman – the tutor who was hired to teach young Mark Zuckerberg – had a tough time doing so because the young chap was very bright, and he couldn’t stay ahead of him before classes. In high school, Mark Zuckerberg took a college graduate program in programming and won prizes in mathematics, physics and astronomy. He used his knowledge to build a program called Zucknet that made it possible for users of the computer at home to communicate with the computer at his father’s dental practice. He started building computer games too, mostly from ideas that friends came up with. When Mark Zuckerberg went to college, there were claims that he could speak English, Greek, French, Latin and Hebrew. He was highly intelligent and knowledgeable in college. This helped him to succeed.

Harvard University

At Harvard University, Mark Zuckerberg was known as a programming guru largely due to what he had achieved with computer programming in high school. Here, her created CourseMatch – a program that helped students pick the right courses, based on those picked by others. At Harvard, Mark Zuckerberg also built a website called Facemash that was so popular, the school had to shut it down.


In 2004, Mark Zuckerberg began creating a website called TheFacebook. The website was hosted on thefacebook.com domain. Other Harvard students like Chris Hughes, Eduardo Saverin, Dustin Moskovitz and Andrew McCollum helped him with building the website. The website was primarily for Harvard students alone, but it became viral and spread to other universities and colleges. Mark Zuckerberg and his friends decided to spread the idea, and other universities became involved in the network. The project spread fast, and Mark Zuckerberg decided to drop out of Harvard, so he could solely dedicate his time it. Together, he and his small team moved to Palo Alto and rented a small house which they used as their office. By 2005, the name had changed from TheFacebook to just Facebook. In 2006, the site was opened up to people over the age of 13. In 2007, over 100,000 businesses had created pages and listed their companies on Facebook. In 2011, Facebook became the largest host of digital photographs, and over 350 million people were accessing the website via their mobile phone.

Independent Public Offer (IPO)

Facebook made its Independent Public Offer (IPO) in May 2012, where they offered 421m shares to investors at $38 per share. The value of the company was set at $104 billion, and this meant that Facebook was the largest business that went public. $16 billion was raised from investors as so many people rushed to purchase the shares. But a couple of weeks after the IPO, the market price of Facebook shares dropped to $27 per share. The share price continued dropping till it reached $19. Investors had lost about 50% of their investment and people weren’t happy. The first week after the IPO saw over 40 lawsuits filed. Now the share price has risen to about $41 per share.

Mark Zuckerberg’s Legacy

In 2010, Times Magazine listed Mark Zuckerberg as one of the 100 wealthiest and most influential people in the world. He is also one of the most influential Jews in the world. Today, Mark Zuckerberg is the CEO of Facebook and one of the top five richest people in the world with an estimated net worth of $71 billion. Thanks to Mark Zuckerberg, we have Facebook which has revolutionized the way people all around the world communicate with one another.


A photo of Warren Buffett whose net worth is over a billion dollars.

Early Life
On the 30th of August 1930, Warren Edward Buffett was born to Leila Buffett and Howard Buffett – a stockbroker that later became a congressman. Warren Buffett is the second child and he has two sisters. As a young boy, he had a knack for business and money, he was so good that he could recall long columns of numbers offhand.
Unsurprisingly, he can still do this today. At age 6, Warren Buffett ventured into his first business proceedings. His grandfather owned a grocery store. He bought 6 packs of Coca-Cola from the grocery store at 25 cents and sold each bottle of Coca-Cola for a nickel, thus making a profit of 5 cents. At such a tender age, he was already displaying his business acumen.

Growing Up
At age 11, Warren Buffett bought three shares of Cities Service for both himself and his sister at $38 per share. Sadly, the price of Cities Service shares fell to $27 per share. Warren held on and thankfully, the price shot up to $40 per share – he immediately sold them and made a profit of $2 per share. But, Warren Buffett will come to regret this decision as the price of Cities Service shares increased to a whopping $200 per share.
At that young age, Warren learnt his first investment lesson – patience is key. Patience is needed for investments, and no true investor can be successful without having patience.

Warren Buffett is well known for his company Berkshire Hathaway which he bought into in the early 1960s, became a major shareholder and helped shape it to the success it is today.

Before Warren Buffett started working with Benjamin Graham, he was an investment salesman. He was very good at it and he enjoyed his job immensely, only encountering sad moments when clients lost money from shares that he suggested.

To prevent himself from having unhappy clients, Warren Buffett started a close
partnership with private friends and families. He created the partnership with unusual rules. He stated that only $100 will be invested by himself. He will then reinvest his management fees until his stake in the partnership increased. 50% of any gains over 4% belonged to Warren Buffett, and he will repay the partnership with a quarter of any loss that the partnership incurred. Partners were not allowed to have any input on investments and money could only be added or withdrawn from the partnership on December 31st.

By 1959, the number of partnerships had increased to 7, and Warren Buffett had a 9.5% stake in over 1 million dollars of partnership assets. In 1962, Warren Buffett became a millionaire, and he merged all the partnerships into one entity.

Buying Berkshire Hathaway
Berkshire Hathaway used to be a textile company. In 1962, Warren Buffett had an opportunity to invest in it, and he took it. He had a dispute with the management of the company, because he felt that the company needed a change of leadership, then he began to buy shares of the company vigorously. Warren Buffett will later say that he regretted his purchase of the company.
Because Warren Buffett had invested in many types of companies, he had a good knowledge of numerous industries. Warren Buffett wasn’t a textile expert and had no experience in running one or working in one, yet he bought Berkshire Hathaway. As time went on, Warren Buffett began to involve Berkshire Hathaway in other industries apart from the textile industry. Berkshire Hathaway became a holding company for Warren Buffett to invest in other things. This led to the buying and selling of companies in different industries.

Berkshire Hathaway has several subsidiaries including Dairy Queen, Fruit of the Loom, GEICO, Benjamin Moore & Co. and NetJets among others. Berkshire Hathaway also has holdings in companies like Procter & Gamble, Wal-Mart Stores, DirectTV, CostCo Wholesale, Wells Fargo, General Electric, American Express, Coca-Cola, IBM, General Motors, etc.

Warren Buffett Today
Today, Warren Buffett is the facilitator and financier of many financial transactions. When the Great Recession happened, Warren Buffett lent money to and invested in some companies that had financial troubles. Warren Buffett is now reaping the rewards of those financial transactions.

For example, his loan to Mars, Inc. gave him a net profit of $680 million. American Express Co. is now worth up to about 5 times what it was when Warren Buffett invested in it in 2008. Berkshire Hathaway bought 120 million shares of Wells Fargo in 2009. The prices of these shares have now gone up over 7 times. Berkshire Hathaway earns $300 million a year in dividends from Bank of America. Berkshire Hathaway also has the option to buy Bank of America shares at a very low price than what they are usually. Berkshire Hathaway earns $500 million a year in dividends from Goldman
Sachs Group. When the shares are repurchased, there will be a $500 million
redemption bonus. Previously, early shares of Berkshire Hathaway were as low as $275 per share. By 2014, the cost per share was $200,000. Now, it is slightly above $330,000.

Warren Buffett is so modest that Forbes did not notice him early. And by the time they added him to the list of richest Americans in 1985, he was already a billionaire. As of 2018, Warren Buffett has an estimated net worth of $83.7 billion, which ranks him as the third richest person in the world.

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