Money is a fundamental concept in modern life, far surpassing its physical form as coins or paper bills. Economically, it is any item or verifiable record generally accepted as payment for goods, services, and repayment of debts. Its invention was a massive leap forward from the inefficiency of the barter system. ​The Three Core Functions of Money ​Money simplifies trade and drives economic activity by performing three essential functions: ​Medium of Exchange: This is money's most primary role. It acts as an intermediary, eliminating the need for a "double coincidence of wants," which was required in a barter economy (e.g., a farmer needing to find a shoemaker who also needed corn). Money makes transactions quick and universal. ​Unit of Account: Money provides a common measure of value for all goods and services. By denominating prices in a single currency (like dollars, euros, or naira), it allows for easy comparison of the relative worth of different items. This simplifies accounting and economic decision-making. ​Store of Value: Money allows wealth to be saved and stored for future use. You can earn money today and reliably use it to purchase goods and services tomorrow. While inflation can erode its purchasing power over time, money must hold its value reasonably well to be effective in an economy. ​Money in the Modern Economy ​In today's world, the most common form of money is fiat money, which is currency not backed by a physical commodity like gold or silver. Its value is derived entirely from the government's decree and the collective trust of the people who use it. ​The overall supply of money in an economy (the money supply) is actively managed by a nation's central bank (like the Federal Reserve in the U.S.). Through tools like adjusting interest rates and buying/selling government bonds, central banks influence the flow of money to maintain economic stability, control inflation, and support employment. ​In essence, money is the lubricant that keeps the complex machinery of the modern economy running smoothly, enabling specialization and trade at a massive scale, which are critical for economic growth and societal prosperity.