In the 20th century, candy manufacturers started selling Hanukkah-themed chocolate coins wrapped in gold or silver foil, as a substitute or supplement to real money gifts.

Rabbi A. P. Bloch has written that "The tradition of giving money (Chanukah gelt) to children is of long standing.

According to Magen Avraham (18th century), it was the custom for poor yeshiva students to visit homes of Jewish benefactors who dispensed Chanukah money (Orach Chaim 670).

[2] It may also have begun in 18th-century Eastern Europe as a token of gratitude toward religious teachers, similar to the custom of tipping service people on Christmas.

In the 1920s, Loft's, an American candy company, produced the first chocolate gelt, wrapped in gold or silver foil in mesh pouches resembling money bags.