Barter Trade - This was the earliest form of exchange where commodities were exchanged for other commodities. It was abandoned because of its disadvantages.

There was no medium of exchange at that time. People had to trade their goods or services directly for other goods or services. If you wanted a bicycle, you would have to find a bicycle owner willing to sell. If the bicycle owner wanted a cow in exchange for the bike and you did not own a cow. You would then need to find something the cow owner wanted in order for trade to go on.
Use of commodities of high value. Commodities used were beads, salt, tobacco, cowry shells, hides and skins, among others. These were used to determine the value of other commodities.

Finding the above commodities bulky and perishable, durable metals such as iron, copper, gold, silver were taken up as money. Silver was dropped as gold took an upper hand.

Later on, paper money was introduced and found convenient for use. This came when people started depositing gold with a man that was called a goldsmith (bankers of that time). Whoever deposited gold would be given a receipt, which would be used to get back the gold. Later, people started to use the receipts to settle debts and obligations because the receipts were as good as gold. Later, government took over the work of goldsmith i.e. the task of issuing paper money was taken over by the government authorities that acted like central banks of today. The gold documents were then standardised to make paper money. As the world became highly commercialised, credit money was also introduced along with paper money. Credit money includes cheques, bank drafts, bills of exchange, and promissory notes.