Money does not need to increase in quantity to be effective; it needs to have five critical traits – divisibility, scarcity, portability, recognizability and durability. Gold was money for thousands of years, and an ounce of gold in Roman times bought a tailored tunic, in the 1970s a fitted suit and today a broad array of fine custom suits. Gold, while having scarcity, durability and recognizability, fails miserably at being divisible and portable. Gold receipts and fiat currency solved this issue and allowed global trade to expand.
Credit: Source link
