The first to invent paper was the Chinese in 202 BCE-220 CE. Cai Lun being the creator. He used fishnets old rags hemp and mulberry. The egyptians also invented a type of paper the papyrus. The papyrus although similar to paper is made in a different way. The paper we use today originates from Lun’s first paper.

‘Papermaking is known to have been traced back to China about 105 CE, when Cai Lun, an official attached to the Imperial court during the Han Dynasty (202 BCE-220 CE), created a sheet of paper using mulberry and other bast fibres along with fishnets, old rags, and hemp waste.[1] However a recent archaeological discovery has been reported from Gansu province of paper with legible Chinese writings on it dating from 8 BCE,[2] while paper had been used in China for wrapping and padding since the eighth century BCE.[3] Paper used as a writing medium became widespread by the 3rd century[4] and, by the 6th century, toilet paper was starting to be used in China as well.[5] During the Tang Dynasty (618-907 CE) paper was folded and sewn into square bags to preserve the flavour of tea,[3] while the later Song Dynasty (960-1279 CE) was the first government to issue paper-printed money.’ 

1.  Papermaking. (2007). In: Encyclopædia Britannica. Retrieved April 9, 2007, from Encyclopædia Britannica Online.
2.  [1] World Archaeological Congress eNewsletter 11 August 2006] Needham, Joseph (1986). Science and Civilization in China: Volume 5, Part 1. Taipei: Caves Books, Ltd. Volume 5, 122
3. Mahdavi, Farid (2003). “Review: Paper Before Print: The History and Impact of Paper in the Islamic World by Jonathan M. Bloom”. Journal of Interdisciplinary History (MIT Press) 34 (1): 129–30.
4. 1.  Mahdavi, Farid (2003). “Review: Paper Before Print: The History and Impact of Paper in the Islamic World by Jonathan M. Bloom”. Journal of Interdisciplinary History(MIT Press) 34 (1): 129–30. doi:10.1162/002219503322645899.
   2. Jump up ^ Lucas, Adam (2006). Wind, Water, Work: Ancient and Medieval Milling Technology. Brill Publishers. pp. 65 & 84. ISBN 90-04-14649-0.
   3. Jump up ^ Jonathan M. Bloom (February 12, 2010). “Paper in the Medieval Mediterranean World” (PDF). Early Paper: Techniques and Transmission – A workshop at the Radcliffe Institute for Advanced Study. Retrieved 2010-03-19.^{[dead link]}
   4. Jump up ^ Mahdavi, Farid (2003). “Review: Paper Before Print: The History and Impact of Paper in the Islamic World by Jonathan M. Bloom”. Journal of Interdisciplinary History(MIT Press) 34 (1): 129–30. doi:10.1162/002219503322645899.
   5. Jump up ^ Burger, Peter. Charles Fenerty and his Paper Invention. Toronto: Peter Burger, 2007. ISBN 978-0-9783318-1-8pp.25-30
   6. Jump up ^ “Making Paper By Hand”. TAPPI. Archived from the original on April 24, 2015. Retrieved 2016-04-30.
   7. Jump up ^ “Forming Handsheets for Physical Tests of Pulp” (PDF). TAPPI. Retrieved 2016-04-30.
   8. Jump up ^ Biermann, Christopher J. (1993). Handbook of Pulping and Papermaking. San Diego: Academic Press. ISBN 0-12-097360-X.