Coin

A coin is a piece of hard material, traditionally metal and usually in the shape of a disc, which is used as a form of money. Traditionally the value of a coin comes from the intrinsic value of the component metal, but in modern times most coins are made of a base metal[?] and their value comes strictly from their status as fiat money.

To distinguish between these two types of coins, as well as from other forms of tokens which have been used as money, monetary scholars have defined there to be three criteria which must be met for an object to be a "true coin". These criteria are:

1. It must be made of a valuable material, and trade for close to the intrinsic value of that material.
2. It must be of a standardized weight and purity.
3. It must be marked to identify the authority that guarantees the content.

By the above definition, the invention and first known usage of coins comes from the Kingdom of Lydia circa 600 BC. Under three generations of Lydian kings, the money of Lydia gradually moved from being lumps of electrum (a naturally occuring mixture of silver and gold) to coins of a guaranteed weight and purity, marked with the seal of the King. True coins also developed very close to this timeframe in both India and China.

Throughout history governments have been tempted to create more coinage than their supply of precious metals would allow. By replacing some fraction of a coin's precious metal content with a base metal, a government reduces the intrinsic value of the coins (thereby "debasing" their money) and can produce more coins then they could otherwise. Debasement of money almost always leads to price inflation unless price controls are also instituted by the governing authority. Some consider a classic example of this phenomenon to be the behavior of price levels in the United States since 1964 when United States Coins ceased to be minted of silver.

The milled edges still found on many coins were originally designed to show that none of the valuable metal had been shaved off the coin. Prior to the use of milled edged coins, circulating currency suffered from "shaving", a common problem where members of the public would cut the edges off circulating coins made of precious metals. Circulating unmilled british sterling silver coins were known to be shaved to almost half of their minted weight. The monarch would have to periodically recall, paying only bullion value of the silver, and re-mint circulating coins.

The front side of a coin, traditionally carrying a picture of the head of a monarch or other authority, is called the obverse, or colloquially heads. The back side is called the reverse, or colloquially tails.

See also: Bill[?], forgery, British coinage, Coinage Metals, United States Coin, Coin collecting, Euro coinage.

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To coin a term is to create a neologism