characteristics of money

Characteristics of Money

What qualities a commodity must have to become used as money

How money originates

✦ Money is a commodity that is mainly used to obtain other goods;

✦ It must originate in free-market by the free choice of people;

✦ It must be valued and demanded as a good.

Widely marketable

Highly demanded and valued good, that is widely accepted. Thus making sure that we’ll be able to use it any time, any where. Gold is in greater demand than pianos and more valuable per kilo.

Transports easily

The whole point of money is to make life easier. Thus convenience of use is very important. Cattle may walk, but it is easier to carry around coins.

Relatively scarce

Scarce and demanded good means high value in small quantities. Sand is abundant and cheap. Gold & silver are very similar, except gold is about 15 times scarcer and more valuable.

Relatively imperishable

We want to be able to use our money for future purchases. That’s why we need durable money. Fresh fish or flowers won’t do the job. Precious metals and gems last forever.

Easy to store

Porcelain would be too fragile to use as money. Ice cubes, too, would be a poor choice for money. Gems and precious metals are a good choice.

Easily divisible

Would you want to buy a pack of bubble gum with a 100$ bill and not get the change? Gems can be even destroyed in the process of dividing them.

All units are similar

We don’t want to take courses in distinguishing and estimating the value of our money. For example, it takes an expert to evaluate gems.

Best choice-gold &

Valued for their use;

Easy to transport;

Scare and valuable;

Lasts forever;

Easy to divide;

All units are similar.

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