People have traded gold for a really long time. With accurate measuring devices and the internet for variable prices, why do people use individual nations currencies and crypto which are often unstable?
In: Economics
Say you want to buy some gum for $1.50. How would that transaction go? Would you give them a tiny little grain of sand sized piece of gold? Don’t you think it would be dangerously easy to lose a lot of money walking around with tiny little flecks of gold?
Gold is impractical for large financial transactions.
Let’s say you manage to find an employer willing to pay you wages in gold, and other merchants who will sell you things like groceries using gold. Great.
Now you’ve saved up and you want to purchase a house. How are you going to do that? Typically you need a loan from a bank – would you want the bank to just hand you 30 POUNDS of gold for a $300,000 house?
You gonna carry pockets full of gold bars around?
Precious metals are used in a wide variety of things from jewelry to industrial uses so we’d rather use them for that.
Precious metals also change in value from minute to minute. You can’t say for sure that the value of a stick of gum will be equal to 1 copper peice. It gets even more unpredictable with larger purchases where 1 gold bar can buy you a range Rover one second and a Honda civic the next.
Because you can always print more money, but you can’t produce more minerals such as gold, silver, diamonds, etc.