A coin is usually a piece of hard material, usually metal or a metallic material, 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 vast amounts of bullion coins. In the present day, coins and banknotes make up the cash forms of all modern money systems. Coins made for circulation (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 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 no longer generally the case with historical circulation coins made of precious metals. For example, the historical Eagle (U.S. coin) contained .48375 troy ounce of gold and has a face value of only ten U.S. dollars, but the market value of the coin, due to its metal content, is now many times the face amount.
Exceptions to the rule of coin face-value being higher than content value, also occur for some non-monetized “bullion coins” made of silver or gold (and, rarely, other metals, such as platinum or palladium), intended for collectors or investors in precious metals. For examples of modern gold collector/investor coins, the United States mints the American Gold Eagle, Canada mints the Canadian Gold Maple Leaf, and South Africa mints the Krugerrand. 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, impractically (i.e., rarely), 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.
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 any 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, thse 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 practical 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-1964 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 difference between fiat values and metal values of coins causes coins to be removed from the market 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. Violators can be punished with a fine of up to $10,000 and/or imprisoned for a maximum of five years.
To distinguish between these two types of coins, as well as from other forms of tokens which have been used as money, some monetary scholars have attempted to define by three criteria that an object must meet to be a “true coin”. These criteria are:
1. It must be made of a valuable material, and trade for close to the market 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.
First coins: The question of the world’s first coin has long been and still is debated. Among numismatists, it is debated whether the world’s first coins originated in Lydia, China, or India (where coins were known as karshapana). One early coin from Caria, Asia Minor, includes a legend “I am the badge of Phanes,” though most of the early Lydian pieces have no writing on them, just 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 Ephesos, also called the Ephesian Artemision (which would later evolve into one of the Seven Wonders of the ancient world). 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.
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. The Mahajanapadas that minted their own coins included Gandhara, Kuntala, Kuru, Panchala, Shakya, Surasena, and Surashtra. Some argue that Indian coins were developed from Western prototypes, which the Indians came in contact with through Babylonian traders.
