Money is an item, usually in the form of a coin or paper, which chiefly has value as a medium of exchange.
Before the concept of money was invented, mankind used the barter system. This was less efficient, as any given item's economic value is subjective. For example, if a farmer wanted a cart but only had his cows' milk to trade, he would have to find someone who both had a cart for trade and wanted milk. With money, the farmer only needs to find someone with a cart for sale.
Money comes in three forms: commodity, fiat, and credit.
Commodity money generally uses precious metals such as gold and silver (many people refer to an economy using commodity money as a "Gold Standard"). Commodity money is generally thought of as the most stable form, as the supply cannot be expanded at whim, although the supply can expand if a significant amount of the commodity enters the economy.