What is the value of the currency notes

The governor of the RBI (Reserve Bank of India) promises to the bearer to give a particular sum of money, even though he has a printed currency note. Then, what is the actual value of money notes that we have nowadays? 

The interesting fact is this money has no intrinsic or inherent value. The money holds some value only; it's because of this promise. It's called fiat money. The government promises to lend a sum of money. The money holds its value because the government and people have faith in it. Before dig in-depth, one more question arises in mind. 

How money was invented?

The first system of trade was the barter system. Mesopotamia tribes were likely the starting point of the bartering system back in 6000 BC. In this system, people trade by using commodities. The trade was possible in the barter system only if both people have the requirement of each other's items. This is the main drawback of this system.

After the failure of the barter system:

People started to use metals or particular things that have their values such as Gold, silver, or copper coins and shells. But it was dangerous and inconvenient to carry these coins. So, they reserve these coins at an official institution. It protects this Gold and gives a token or contract to another person. It's easeful to carry a piece of paper instead of a bag filled with metal coins. 

Gold Standard:

People use this contract for purchases, and this contract circulated instead of metal coins. This is how the concept of representative money evolved. In simple words, the institution which took Gold people called a bank. Then, the story of the gold standard started. In this system, the currency of a nation is directly linked to the Gold. The countries have to convert their paper money or currency into Gold. They can print as much paper money as Gold they have. However, Gold is a rare metal, so the limited amount is on the earth. 

Fiat Money:

Now the concept of fiat money came in to picture. This system was initiated by China and became popular in the 20th century when U.S. President Richard Nixon introduced a law that stopped the conversion of the U.S. dollar into Gold. Afterward, most of the countries followed the path of the USA. In 1940, the Indian silver rupee replaced by the quaternary alloy rupee. One rupee note introduced. This note had the status of a rupee coin and represented the introduction of official fiat money in India. 

Only the Reserve banks hold power to print money. We can't print money to pay out debts. If we can, then the inflation rate will be rocketing. 

Conclusion

The important thing is that fiat money is floating. Its value is volatile and also depends on government, politics, and economy. Instead of saving money in banks, advisable to invest money in gold or real estate as they have their inherent value. If you invest 100000 Rs in the bank doesn't mean that you will get the same amount. You may also get 7000 Rs if the inflation rate increases beyond 0-5%. The history carved the consequences of Zimbabwe and Hungry due to hyperinflation.