Paper Money collecting as a hobby

Banknote collecting, or Notaphily, is a rapidly growing area of numismatics. Although generally not as widespread as coin and stamp collecting, the hobby is increasingly expanding. Prior to the 1990s, currency collecting was a relatively small adjunct to coin collecting, but the practice of currency auctions, combined with larger public awareness of paper money have caused a boom in interest and values of rare banknotes.

In the 1950s, Robert Friedberg published the landmark book Paper Money of the United States. Friedberg devised an organizing number system of all types of U.S. banknotes; the system is widely accepted among collectors and dealers to this day, and the volume has been regularly updated.

Another pioneer of cataloguing banknotes was Albert Pick, a well-known German notaphilist (born 15 May 1922 in Cologne) who published a number of catalogs of European paper money, and, in 1974, the first Standard Catalog of World Paper Money. His collection of over 180,000 banknotes was eventually housed at the Bavarian Mortgages and Exchange Bank (Bayerischen Hypotheken- und Wechselbank, now HypoVereinsbank). This catalog underwent several revisions, ending up as three volumes. Volume I covers Specialized Issues, including private banknotes and rarities. Volume II covers General issues from all over the world, dated 1368 through 1960. Volume III covers modern issues dated 1960 to date. Each of the volumes is updated regularly, with Volume III now updated every year, Volumes I and II every 3 or so years. While Pick no longer edits the catalogs (the honor has passed to George S. Cuhaj), the catalogs are still commonly referred to as 'Pick Catalogs' and dealers and collectors alike refer to banknotes by their 'Pick number.'

Value of Paper Money

The inherent value of paper money is zero, except when it is measured against the value of consumables the bearer can exchange for each unit of currency in his or her possession. Additionally; paper money has an intangible value that is directly related to the condition of need of its bearer. While a one hundred dollar currency may be inconsequential to a person with little material need the same may be the governing factor between homelessness, health, and even life for another with lesser means hence; priceless. Simply put, paper money is valued at the maximum amount of consumable for which it can be traded either directly or indirectly.

History

Paper money originated in two forms: drafts, which are receipts for value held on account, and "bills", which were issued with a promise to convert at a later date.

Money is based on the coming to pre-eminence of some commodity as payment. The oldest monetary basis was for agricultural capital: cattle and grain. In Ancient Mesopotamia, drafts were issued against stored grain as a unit of account. A "drachma" was a weight of grain. Japan's feudal system was based on rice per year – koku.

At the same time, legal codes enforced the payment for injury in a standardized form, usually in precious metals. The development of money then comes from the role of agricultural capital and precious metals having a privileged place in the economy.

Such drafts were used for giro systems of banking as early as Ptolemaic Egypt in the first century BC.

The perception of banknotes as money has evolved over time. Originally, money was based on precious metals. Banknotes were seen as essentially an I.O.U. or promissory note: a promise to pay someone money, but not actual money. As banknotes became more widely used, they became more accepted as equivalent to precious metal. With the gradual removal of precious metals from the monetary system, banknotes evolved to represent fiat money.

Generally, a central bank or treasury is solely responsible within a state or currency union for the issue of banknotes. Historically, many different banks or institutions may have issued banknotes in a country; the United Kingdom is an example of a country that retains multiple issuers of banknotes.