Coin (money)
 | This article needs additional citations for verification. (March 2007) |
| Part of a series on |
| Numismatics the study of currency |
|---|
 |
A coin is a piece of hard material, usually metal or a metallic material and sometimes made of synthetic materials, usually in the shape of a disc, and most often issued by a government. Coins are used as a form of money in transactions of various kinds, from the everyday circulation coins to the storage of large numbers of bullion coins. In the present day, coins and banknotes make up the cash forms of all modern money systems. Coins made for paying bills and (general monetized use) are usually used for lower-valued units, and banknotes for the higher values; also, in most money systems, the highest value coin made for circulation is worth less than the lowest-value note. The face value of circulation coins is usually higher than the gross value of the metal used in making them, but this is not generally the case with historical circulation coins made of precious metals.
Exceptions to the rule of coin face-value being higher than content value, also occur for some "bullion coins" made of silver or gold (and, rarely, other metals, such as platinum or palladium), intended for collectors or investors in precious metals. Examples of modern gold collector/investor coins include the American Gold Eagle minted by the United States, the Canadian Gold Maple Leaf minted by Canada, and the Krugerrand, minted by South Africa. The American Gold Eagle has a face value of US$50, and the Canadian Gold Maple Leaf coins also have nominal (purely symbolic) face values (e.g., C$50 for 1 oz.); but the Krugerrand does not.
Historically, a great number of coinage metals (including alloys) and other materials have been used practically, artistically, and experimentally in the production of coins for circulation, collection, and metal investment, where bullion coins often serve as more convenient stores of assured metal quantity and purity than other bullion.[1]
Coins have long been linked to the concept of money, as reflected by the fact that in other languages the words "coin" and "currency" are synonymous. Fictional currencies may also bear the name coin (as such, an item may be said to be worth 123 coin or 123 coins).
The value of a coin
In terms of its value as a collector's item, a coin is generally made more or less valuable by its condition, specific historical significance, rarity, quality/beauty of the design and general popularity with collectors. If a coin is greatly lacking in all of these, it is unlikely to be worth much. Bullion coins are also valued based on these factors, but are largely valued based on the value of the gold or silver in them. Sometimes non-monetized bullion coins such as the Canadian Maple Leaf and the American Gold Eagle are minted with nominal face values less than the value of the metal in them, but as such coins are never intended for circulation, these value numbers are not market nor fiat values, and are never more than symbolic numbers.
Most coins presently are made of a base metal, and their value comes from their status as fiat money. This means that the value of the coin is decreed by government fiat (law), and thus is determined by the free market only as national currencies are subjected to arbitrage in international trade. This causes such coins to be monetary tokens in the same sense that paper currency is, when the paper currency is not backed directly by metal, but rather by a government guarantee of international exchange of goods or services. Some have suggested that such coins not be considered to be "true coins" (see below). However, because fiat money is backed by government guarantee of a certain amount of goods and services, where the value of this is in turn determined by free market currency exchange rates, similar to the case for the international market exchange values which determines the value of metals which back commodity money, in practice there is very little economic difference between the two types of money (types of currencies).
Coins may be minted that have fiat values lower than the value of their component metals, but this is never done intentionally and initially for circulation coins, and happens only in due course later in the history of coin production due to inflation, as market values for the metal overtake the fiat declared face value of the coin. Examples of this phenomenon include the pre-1965 US dime, quarter, half dollar, and dollar, US nickel, and pre-1982 US penny. As a result of the increase in the value of copper, the United States greatly reduced the amount of copper in each penny. Since mid-1982, United States pennies are made of 97.5% zinc coated with 2.5% copper. Extreme differences between fiat values and metal values of coins causes coins to be removed from circulation by illicit smelters interested in the value of their metal content. In fact, the United States Mint, in anticipation of this practice, implemented new interim rules on December 14, 2006, subject to public comment for 30 days, which criminalize the melting and export of pennies and nickels.[2] Violators can be punished with a fine of up to $10,000 and/or imprisoned for a maximum of five years.
First coins
The first metal coins are regarded by some as having been invented in China. The earliest known Chinese metal tokens were made ca. 900 BC, discovered in a tomb near Anyang.[3][4] These were replicas in bronze of earlier Chinese money, cowrie shells, so they were named Bronze Shell.[5][6][7] Most numismatists, however, regard these as well as later Chinese bronzes that were replicas of knives, spades, and hoes as money but not as coins because they didn't at least initially carry a mark or marks certifying them to be of a definite exchange value.[8]
Coins originated independently in Anatolia, with most numismatists regarding Lydia as the birthplace of coinage.[9][10] The Greeks soon adopted the Lydian practice and extended it to commerce and trade, with coinage following Greek colonization and influence first around the eastern Mediterranean and soon after to North Africa (including Egypt), Syria, Persia, and the Balkans.
The first Lydian coins were made of electrum, an alloy of silver and gold.[11] Many early Lydian coins were undoubtedly struck (manufactured) under the authority of private individuals and are thus more akin to tokens than true coins, though because of their numbers it's evident that some were official state issues, with King Alyattes of Lydia being the most frequently mentioned originator of coinage.[12]
Most of the early Lydian coins have no writing on them, just images of symbolic animals. Therefore the dating of these coins relies primarily on archeological evidence, with the most commonly cited evidence coming from excavations at the Temple of Artemis at Ephesus, also called the Ephesian Artemision (which would later evolve into one of the Seven Wonders of the ancient world).
A small percentage of early Lydian coins include writing, called a "legend" or "inscription." Another famous early electrum coin with a legend is from nearby Caria, Asia Minor, with the legend reading, "I am the badge of Phanes." Nothing is known about who Phanes was, but one logical assumption is that he was a wealthy merchant.
Along with China and Anatolia, India also played a major part in the development of coinage. The first Indian coins were minted around the 6th century BC by the Mahajanapadas of the Indo-Gangetic Plain. The coins of this period were punch marked coins called Puranas, Karshapanas or Pana.[citation needed] The Mahajanapadas that minted their own coins included Gandhara,[13] Kuntala,[14] Kuru,[15] Panchala,[16] Shakya,[17] Surasena,[18] and Surashtra.[19] Some argue that Indian coins were developed from Western prototypes, which the Indians came in contact with through Babylonian traders.[20]
The earliest coins made of pure gold and silver were made by King Croesus of Lydia, son of Alyattes. Shortly afterward in the same region gold "darics" and silver "sigloi" were issued by the Achaemenid Empire of the Persians.
The first European coin to use Arabic numerals to date the year in which the coin was minted was the Swiss 1424 St. Gallen silver Plappart.[21]
Coin debasement
Throughout history, governments have been known 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 (often copper or nickel), the intrinsic value of each individual coin was reduced (thereby "debasing" their money), allowing the coining authority to produce more coins than would otherwise be possible. Debasement sometimes occurs in order to make the coin harder and therefore less likely to be worn down as quickly. Debasement of money almost always leads to price inflation unless price controls are also instituted by the governing authority, in which case a black market will often arise.
The United States is unusual in that it has only slightly modified its coinage system (except for the images and symbols on the coins, which have changed a number of times) to accommodate two centuries of inflation. The one-cent coin has changed little since 1856 (though its composition was changed in 1982 to remove virtually all copper from the coin) and still remains in circulation, despite a greatly reduced purchasing power. On the other end of the spectrum, the largest coin in common circulation is 25 cents, a low value for the largest denomination coin compared to other countries. Recent increases in the prices of copper, nickel, and zinc, mean that both the US one- and five-cent coins are now worth more for their raw metal content than their face (fiat) value. In particular, copper one-cent pieces (those dated prior to 1982 and some 1982-dated coins) now contain about two cents worth of copper. Some denominations of circulating coins that were formerly minted in the United States are no longer made. These include coins with a face value of half a cent, two cents, three cents,and twenty cents. (The Half Dollar and Dollar coin is still produced, but mostly for vending machines and collectors.) The United States also used to coin the following denominations for circulation in gold: One dollar, $2.50, three dollars, five dollars, ten dollars, and twenty dollars. In addition, cents were originally slightly larger than the modern quarter and weighed nearly half an ounce, while five cent coins were smaller than a dime and made of a silver alloy. Dollars were also much larger and weighed approximately an ounce. Half dollar and one dollar coins are still produced but rarely used. The U.S. also has bullion and commemorative coins with the following denominations: 50¢, $1, $5, $10, $25, $50, and $100.
Features of modern coins
The milled, or reeded, edges still found on many coins (always those that were once made of gold or silver, even if not so now) were originally designed to show that none of the valuable metal had been removed. Prior to the use of milled edges, circulating coins commonly suffered from "shaving" or "clipping", by which unscrupulous persons would cut off small amounts of precious metal from their edges. Unmilled British sterling silver coins were sometimes reduced to almost half their minted weight. This form of debasement in Tudor England was commented on by Sir Thomas Gresham, whose name was later attached to Gresham's Law. The monarch would have to periodically recall circulating coins, paying only bullion value of the silver, and reminting them.
Traditionally, the side of a coin carrying a bust of a monarch or other authority, or a national emblem, is called the obverse, or colloquially, heads; see also List of people on coins. The other side is called the reverse, or colloquially, tails. However, the rule is violated in some cases.[22] Another rule is that the side carrying the year of minting is the obverse, although some Chinese coins, most Canadian coins, the pre-2008 British 20p coin, and all Japanese coins, are exceptions.
In cases where a correctly oriented coin is flipped vertically to show the other side correctly oriented, the coin is said to have coin orientation. In cases where a coin is flipped horizontally to show the other side, it is said to have medallic orientation. The latter is found in British coins.
Bi-metallic coins are sometimes used for higher values and for commemorative purposes. In the 1990s, France used a tri-metallic coin. Common circulating examples include the €1, €2, British £2 and Canadian $2.
The exergue is the space on a coin beneath the main design, often used to show the coin's date, although it is sometimes left blank or containing a mint mark, privy mark, or some other decorative or informative design feature. Many coins do not have an exergue at all, especially those with few or no legends, such as the Victorian bun penny.
Not all coins are round. The Australian 50 cent coin, for example, has twelve flat sides. A twist on it is wavy edges, found in the two dollar and the twenty cent coins of Hong Kong and the 10 cent coins of Bahamas.
Some other coins, like the British Fifty pence coin, have an odd number of sides, with the edges rounded off. This way the coin has a constant diameter, recognisable by vending machines whichever direction it is inserted.
The triangular coin (produced to commemorate the 2007/2008 Tutankhamun exhibition at the The O2 Arena) was commissioned by the Isle of Man, became legal tender on 6 December 2007.[23] and has a value of 25p (a crown). Other triangular coins issued earlier include: Cabinda coin, Bermuda coin, 2 Dollar Cook Islands 1992 triangular coin, Uganda Millennium Coin and Polish Sterling-Silver 10-Zloty Coin.[24]
Guitar-shaped coins were once issued in Somalia, Poland once issued a fan-shaped 10 złoty coin, but perhaps the oddest coin ever was the 2002 $10 coin from Nauru, a Europe-shaped coin.[25]
Some mediaeval coins, called bracteates, were so thin they were struck on only one side.
The Royal Canadian Mint is now able to produce holographic-effect gold and silver coinage.
For a list of many pure metallic elements and their alloys which have been used in actual circulation coins and for trial experiments, see coinage metals.[26]
Coins are popularly used as a sort of two-sided die; in order to choose between two options with a random possibility, one choice will be labeled "heads" and the other "tails", and a coin will be flipped or "tossed" to see whether the heads or tails side comes up on top. See Bernoulli trial; a fair coin is defined to have the probability of heads (in the parlance of Bernoulli trials, a "success") of exactly 0.5. See also coin flipping. Coins are sometimes falsified to make one side weigh more, in order to simulate a fair type of coin which is actually not fair. Such a coin is said to be "weighted".
See also
.jpg){kind=link}
- Bracteate
- Bullion coin
- Category:Currency images
- Coin collecting
- Coin counter
- Coin counterfeiting
- Coin trick
- Coinage of Asia
- Coinage metals
- Counterfeit
- Euro coins
- History of coins
- Numismatics
- Ashrafi
Notes
- ^ Comprehensive list of metals and their alloys which have been used at various times, in coins for all types of purposes.
- ^ The United States Mint Pressroom
- ^ http://www.big5.henan.gov.cn/hngk/system/2006/08/02/010000219.shtml (IN CHINESE ONLY)
- ^ http://books.google.com/books?id=RGu62yiVF8wC&pg=PT186&dq=shang+coin&lr=#PPT187,M1
- ^ http://chinesechinese.net/HistoryofChina.html A snap shot view of The history of China by YK Kwan
- ^ http://www.travelchinaguide.com/intro/focus/currency.htm Shell Money before Qin Dynasty
- ^ http://encarta.msn.com/encyclopedia_681500371_2/shang_dynasty.html Shang Dynasty Economy Encarta
- ^ G. Davies, A History of Money: From Ancient Times to the Present Day, University of Wales Press, Cardiff, 1994, pp. 54-57, 62.
- ^ M. Kroll, review of G. Le Rider's La naissance de la monnaie, Schwizerische Numismatische Rundschau 80 (2001), p. 526.
- ^ D. Sear, Greek Coins and Their Values Vol. 2, Seaby, London, 1979, p. 317.
- ^ http://rg.ancients.info/lion/article.html
- ^ A. Ramage, "Golden Sardis," King Croesus' Gold: Excavations at Sardis and the History of Gold Refining, edited by A. Ramage and P. Craddock, Harvard University Press, Cambridge, 2000, p. 18.
- ^ http://home.comcast.net/~pankajtandon/galleries-gandhara.html Accessed 3 May 2007
- ^ http://home.comcast.net/~pankajtandon/galleries-kuntala.html Accessed 3 May 2007
- ^ http://home.comcast.net/~pankajtandon/galleries-kuru.html Accessed 3 June 2007
- ^ http://home.comcast.net/~pankajtandon/galleries-panchala.html Accessed 3 June 2007
- ^ http://home.comcast.net/~pankajtandon/galleries-shakya.html Accessed 3 June 2007
- ^ http://home.comcast.net/~pankajtandon/galleries-shurasena.html Accessed 3 June 2007
- ^ http://home.comcast.net/~pankajtandon/galleries-surashtra.html Accessed 3 June 2007
- ^ M. Mitchiner, Ancient Trade and Early Coinage, Hawkins Publications, London, 2004, pp. 741-742.
- ^ Early Dated Coins, http://www.medievalcoinage.com/earlydated
- ^ The Euro Coin and the Inadequacy of our definition of "Obverse"
- ^ It is unlikely to be spent as it costs 15GBP to buy - article Pyramid coin a nightmare for pockets, article by Gary Cleland p13 of the Daily Telegraph issue number 47,434 dated December 6, 2007
- ^ Triangular Coins
- ^ All is not round in the world 10/17/05
- ^ Metals Used in Coins and Medals
References
- Denis R. Cooper: The art and craft of coinmaking. A history of Mining Technology. London: Spink, 1988. ISBN 0-907605-27-3.
- A Case for the World's First Coin: The Lydian Lion
External links
- ANA American Numismatics Association.
- American Numismatic Society
- Atlantic Provinces Numismatic Association providing news, events, latest releases from around the world, forums, and much more.
- CoinFacts.com - The Internet Encyclopedia of US Coins Free information on United States Coins, including pricing, rarity, and historical information.
- Coin Talk Forum - Community website for numismatists and coin collectors.
- Coin catalog 12,345 coins with pictures.
- Coin Image Database
- Silver Coins - How to identify counterfeit silver coins.