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Chapter II - Early Coinage: 1000BCE to Ancient Rome

Apr 30, 2023
byNDAX Labs

In our last installment, we discussed the early history of trade via barter and the invention of money and currency as a necessity to facilitate commerce. We talked about solving the problem of the coincidence of wants, and necessitating the need for the invention of a common currency—money.

Today, we dig into the first widespread use of metal coins by centralized entities--emperors, kings and political rulers. Early Coinage through the beginning of Antiquity marked the glorious period of artistic and scientific progress right before the Roman Empire got a little too greedy (and a little too big for its britches) and plunged the world into the Dark Ages.


Let’s start with a brief historical overview of the use of metal coins as currency in different parts of the world.

As we discussed in last chapter, the Shang Dynasty (1600-1046 BCE) in ancient China used bronze as a primary material for their coins... But these coins were cast in various shapes, such as yes, coins, but also spades, knives, and other tools, making it a little harder for their widespread use and adoption. It’s not exactly clear who minted these coins as there are no surviving records of their production process, but it’s believed that the casting of bronze artifacts, including the coins, was carried out by skilled artisans and craftsmen who were employed by the ruling class. The production of bronze coins during the Shang Dynasty was an important aspect of their economy and trade, and the coins were used as a medium of exchange for goods and services.

But it wasn’t until around the 7th century BCE in ancient Lydia, a region in present-day Turkey, that the first known and widely recognized use of metal coins as currency began to enjoy widespread use and adoption... This was also the first recorded instance of a political ruler taking it upon themselves to undertake the minting and distribution of money—or government currency. The Lydians minted coins made of electrum, a naturally occurring alloy of gold and silver. Since these coins were of a standard weight and had a design on one side which helped to prevent counterfeiting, trust in the currency contributed to their widespread adoption and therefore, greatly accelerated commerce.

Soon after, other ancient civilizations such as Greece, Persia, and Rome also started using coins as a form of currency: The Greek city-states minted coins with various designs that reflected their culture and history, and the coins of Persia were made of gold and silver. During the Roman Republic, coins were made of bronze and silver, and were used to pay soldiers and government officials, from where they would naturally trickle down through the local economy. Later, during the Roman Empire, gold coins were also introduced.

Back in China, the use of metal coins (as a government currency) dates to the Tang dynasty (618–907 CE), when the government began to mint coins made of bronze or iron. These coins were used to pay taxes and trade goods.

In India too, metal coins enjoyed (selective) use as currency, starting back in ancient times. Their earliest known use was the silver punch-marked coins of the Maurya Empire of 321–185 BCE. Later, during the Gupta Empire (320–550 CE), gold coins were also introduced.

In Europe, the use of metal coins as currency became widespread during the Middle Ages, after the fall of the Roman Empire, which had ‘recently’ conquered (and then lost) most of it. These coins were minted by local rulers and often featured designs that reflected their authority.

It wasn’t until the Renaissance that followed the (Dark/) Middle Ages that the first gold coins were introduced, and a currency began to enjoy truly global usage and adoption—or the world’s first ‘reserve currency’, if you will. (No offense to the alloy coins of Lydia or their gold Indian counterparts: They weren’t exactly used to settle international trade. But that’s beyond the scope of this chapter—you know we’ll come back to this later.) In the Americas, the use of metal coins as currency was introduced by European colonizers: The Spanish brought silver coins to the Americas, and later the British and French also introduced their own coins—but this wouldn’t happen until the 16th and 17th centuries, respectively, and are therefore also the purview of later focus.


If history shows us anything: Absolute power corrupts absolutely. And few powers are more absolute than the power of monetary policy and a monopoly over the minting and distribution of  currency.

Indeed, adjacent to every historical instance of government-issued money the irresistible human urge to abuse its privilege: It rarely took a ruler or government long to figure out that the money they controlled could also be debased. But there’s no such thing as a free lunch, and eventually, the monetary chickens always come home to roost. There are no—none, nada, zilch—examples of a government-issued currency which hasn’t ended up destroyed, made obsolete or—more often than not--hyperinflated to oblivion as a direct result of manipulation, mismanagement, or greed.

Ancient Greece: In the 5th century BCE, Athens began debasing their silver coins, reducing the amount of silver in them by as much as 25%. This practice continued throughout the ancient Greek world.

Ancient India: The Mauryan Empire (321-185 BCE) in India debased their coins by skimping on the amount of precious metal in them.

Ancient China: During the Han Dynasty (202 BCE-220 ACE), the Chinese government began debasing their bronze coins by reducing the amount of copper in them.

These are just a few examples, but money debasement has been a common practice throughout history, often used by rulers to sneakily finance wars (or other unpopular/pet government projects) without raising taxes or borrowing. Some historians, economists, and political scientists have been known to refer to this practice as “Theft”.

But one of the most well-recorded instances of monetary debasement can be traced back to Ancient Rome.


Indeed, a most well-recorded early instance of massive government currency failure marked the slow and excruciating decline of the Roman Empire. It experienced several bouts of currency devaluation and hyperinflation, which significantly impacted the economy and ultimately, contributed to its total devastation.

During the reign of Emperor Nero in the 1st century (64 ACE), the Roman government started debasing their silver denarius coins, reducing the amount of silver in the coins by around 10% in an effort to finance wars and other expenses (a process known as debasement). This practice was continued by subsequent emperors, such that by the end of the 3rd century, the denarius contained only 0.5% silver. Inflation had steadily risen throughout the 3rd century, which of course gradually led to a total loss of faith in the value of the Roman currency, causing inflation to skyrocket and spiral out of control.

By the 4th century AD, the Roman currency had become almost worthless, and many people had also lost faith in its issuers (the government). This, along with other factors such as military defeats, political instability, and economic decline, contributed to the eventual collapse of the Empire in 476. The failure of the Roman currency system had a profound impact on history, as it contributed to the decline of one of the most powerful empires the world had seen: It also served as a cautionary tale for future governments, demonstrating the dangers of currency devaluation and hyperinflation. (A cautionary tale which apparently most of the world has stubbornly refused to heed—even to this day.)


The debasement of the denarius currency was a major factor contributing to the fall of the Roman Empire. How did it play a role in its decline?

Economic Instability: The debasement of their currency caused inflation, which eroded the purchasing power of Roman citizens. As the value of the currency declined, prices for goods and services increased, leading to economic instability and social unrest.

Loss of Trust: The debasement of the Roman currency also eroded the trust of Roman citizens in their government and its ability to manage the economy. This loss of trust contributed to a decline in civic participation, as people became less willing to pay taxes and participate in public life.

Military Weakness: As the value of the Roman currency declined, it became more difficult for the government to maintain the strength of its military. The cost of maintaining a large and powerful army increased, while the value of the currency used to pay soldiers declined. This made it difficult for the government to recruit and retain soldiers, which weakened the military and left the empire vulnerable to invasion and conquest.

Trade Disruption: The debasement of the Roman currency disrupted trade, as foreign merchants became less willing to accept Roman coins as payment. This made it more difficult for the empire to import goods and raw materials, which contributed to economic decline and weakened the empire's ability to support its population and military.

Decline of State Revenue: The debasement of the Roman currency made it more difficult for the government to collect taxes;, not only did citizens feel squeezed in a currency regime that was rapidly losing value, but they also quickly became less willing to pay taxes. This decline in state revenue made it more difficult for the government to fund its operations, including the military, which contributed to the decline of the empire.

In sum, the debasement of the Roman currency led to economic instability, loss of trust, military weakness, trade disruption, and decline of state revenue, which ultimately contributed to the fall of one of the greatest empires in history.


There were a few strategies that early civilizations used to try to maintain their purchasing power in the face of monetary debasement.

Barter: Bartering was a common practice before the invention of coins, and it continued to be used as a means of exchange even after coins were introduced. In times of monetary debasement, people might turn to bartering as a way of avoiding the use of devalued currency.

Foreign Currency: In some cases, people would turn to foreign coins that were considered more reliable than their own debased currency. For example, during the Roman Empire, some people might have used coins from other regions, such as the Greek tetradrachm, which was considered more reliable than the Roman denarius.

Price controls: Some governments tried to maintain the purchasing power of their currency by instituting price controls. For example, the Roman Empire set limits on the prices of certain goods in an attempt to prevent inflation.

Minting new coins: Some governments would try to address monetary debasement by minting new coins with a higher percentage of precious metal. However, this was often difficult to do, as it required a reliable source of precious metal, skilled minting techniques, and of course, an ever-eroding trust in the issuer of the new currency.

Despite these efforts, monetary debasement often had significant social and economic consequences, such as social unrest, inflation, and a loss of faith—or full-on distrust of--government and its ability to manage the economy. And that’s on the peaceful side of the spectrum...


The first Sunday of next month, we’ll cover some of the devastating ramifications of Rome’s monetary failure and the thousand-year void it left on the world; aka the Dark Ages. That’s right: We’re about to get Medieval on money and travel through this  period of pestilence and death until the Enlightenment at the end of the tunnel and the beginning of paper money. Plague, famine, tyranny and torture, huzzah! Obviously, you’re not going to want to miss this one so stay tuned.

Disclaimer: This article is not intended to provide investment, legal, accounting, tax or any other advice and should not be relied on in that or any other regard. The information contained herein is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of cryptocurrencies or otherwise.