The idea of money is older than coinage; grain, metal ingots, and weighed precious metals had long served as means of exchange and accounting. Lydia's innovation was to produce small pieces of standardized weight stamped by an authority, rather than weighing value each time. These pieces were made of electrum — a natural gold–silver alloy — and the stamp on them guaranteed weight and purity.

The effect of this relatively small technical change was large: value was now reduced to a portable, countable unit recognized by all. Trade quickened, the state found payment and tax collection easier, and the notion of price spread. After Lydia, neighboring Greek cities and the Persian Empire struck their own coins; the practice spread rapidly across the Mediterranean world.

The traditional account links coinage with the wealth of the Lydian king Croesus; the exact date of the first coins and the reign in which they began are debated. What is clear is that coined money emerged in western Anatolia and became the model for a standardized, state-guaranteed medium of exchange.