In the beginning there was barter and debt. Your neighbors helped you harvest your field, so you gave them shares of the produce and animals. Exchanges of goods and favors/obligations were the first types of trade that we know of. 

Over time, certain commodities in a culture became widely accepted enough like salt, seashells, copper, gold, and silver that they became the first true monies. After all, that's what money is: the commodity that can be universally exchanged for all other goods. If you know that everyone will take a pound of salt as a unit of trade, then you can begin to buy and sell in a rational manner. You can make plans that stretch over long periods of time and account for profits and losses. This is where complex strategy on an individual level can really take off. In other words, what we today call civilization is made possible by money. Without money, you wouldn't be able to coordinate actions over time and space very well. Yes, you could build a pyramid in Egypt, but you couldn't build modern day Cairo with millions of people interacting every day at today's standard of living.

The key to money is that universal exchange. So if you make something or perform a service for someone else and get paid for it with money, then you are confident that you will be to turn around and use that money to procure goods and services from other people.

This is vastly more efficient than barter because under a barter system you need to find someone willing to do an even trade with you both in quantity and in time. So maybe I have eggs and you have butter. Those are fairly small items and pretty easy to trade. But what happens when I have a house and you have chickens? How many chickens is a house worth? What am I going to do with all those chickens right at that moment in time, even if I wanted them. I'd need coops, a watering system, feed, etc. Barter becomes intractably complex very quickly. Money solves that problem. I sell you the house, you do whatever you want with your chickens. I am happy receiving the money for the house because I can use that money to do whatever it is I want with the money later on.

So commodity money was the first money.

After a while, governments realized that controlling the money gave them a huge advantage in controlling the population. So they started to mint coins. Croesus is usually credited with this invention. Coinage brought standardization, which is helpful. A standard 1 troy ounce .999 gold coin is helpful in trade because you don't have to argue about the quality of the money and how much it's really worth - a problem that can come up in pure commodity money. Standards of weight and measurement create more predictability, which again is the main advantage of money in the first place. So coinage furthered that advantage. 

Of course, coined money had its share of problems, among them debasement and clipping. If you find old Roman coins, you'll find that a lot of them are an oval shape. They didn't start out that way. People shaved the edges of the circular coin over time so they could pass of a 1-unit coin with less actual metallic content than the unit represented. Additionally both the issuing governments and enterprising folks would melt coins and recast them with lower quality metals. Again, the idea is to pass off a 1-unit coin with less than the face value worth of gold, silver, or copper (the three main monetary metals of the times).

The core problem was that coined money came to represent an abstract separation from the commodity money it represented. A denarius or a tael or a sterling was supposed to be a unit of measurement, but they became things unto themselves. So people stopped thinking in terms of weight and quality of commodity money and started thinking in terms of units of coins.

Coin money was the second money.

Over the course of the centuries as trade expanded and economies became more complex people found it more and more convenient to trade money substitutes. These money substitutes were receipts for money held on deposit at a trusted warehousing location. These evolved into banks. Instead of carrying around 47 ounces of gold for a large trade deal, a merchant would carry a piece of paper that could be traded in for the gold when presented at the bank. After all, carrying gold could be lost or stolen. A piece of paper is much easier to protect. The Italian merchant princes really pioneered this practice during the Renaissance, and in fact that is where the term "bank" comes from. The money merchants would sit in the marketplace on their benches, "banco" in Italian.

Money substitutes made for easier trade, but were not without their problems. The warehouse operators couldn't seem to stay away from the temptation to issue more paper receipts than they actually had coins in storage. When word got out that a particular merchant would wasn't good for the paper receipts he was issuing, then everyone would try to turn in their receipts as quickly as possible so they could beat out everyone else and actually get their coins. The Italians sitting on their bancos would break or "rupture" their benches and that would let everyone know that they were out of business. And that's where we get the term "bankrupt." 

Nonetheless, the system worked well enough with all its faults to persist into the modern age. These money substitutes persisted basically until World War I. After World War I, the Great Depression, and World War II the major governments of the world got together and created a new standard where the official moneys of the nations would be simple creations of the printing press. In effect, money substitutes became money.

Technically there was a check on the printing of this new money since those franks, reals, marks, and so on could be converted to US dollars, and the US dollars could be converted to gold. But that limitation was removed in 1971 when Nixon closed the "gold window" that allowed other governments to convert their US dollars into gold.

Since then, we have been in a pure money-substitute-as-money world, also known as fiat money. It's called fiat money because these bills and coins are money simply because the local government says so.

Fiat money was and still is the third money.

Fiat money of course has lots of problems. Without a limit on the ability to create money, we have seen inflation of the money supply become a way of life, which causes problems with trying to coordinate transactions over time. In my own lifetime in the US, I have seen general prices go up by multiples of 3 or 4 times, and some specific prices go up much more than that.  

Then you probably all know that someone called Satoshi Nakamoto wrote a paper and created a technology that solved a lot of the problems of all the previous types of money called bitcoin.

Since that time, we have begun the transition into the fourth stage of money, cryptocurrency.

Cryptocurrency is not money yet (see my earlier post https://steemit.com/cryptocurrency/@nealmcspadden/is-cryptocurrency-money ), primarily because it has not reached universal transaction status, but we are getting there.

To be sure, not all of the problems have been solved. Bitcoin and many other cryptocurrencies suffer from a problem with seignorage, where the early adopters have vastly more power, money, and control than the later adopters. What has been solved generally are the problems of uncontrolled inflation, counterfeiting, and double spending. 

Once the adoption challenge has been overcome,

Crypto will be the fourth money.