Eli5 what it means when a currency is said to be backed by gold

Question

I see this all the time, mostly when references are made about the dollar and how it was once backed by gold

In: 164

Answer 1

If you find someone 60+ years old they might say something like “back in my day, you could go to the bank and get an ounce of gold for $35”. Gold backed currency means that the currency is just a ticket it for gold and you trade the tickets because no one wants to lug around a pound of gold in their wallet when $420 is alot lighter.