Why was Gold Used as a Currency

Ancient gold coins

Gold has been the world’s currency for thousands of years. The rise of the current monetary system with fiat money did not happen until the middle of the 20 century. It has been used by all major world civilizations throughout the whole history. Many people might wonder why gold was accepted as a currency for such a long time. There are many reasons, but the most important of them include the following:

Gold was one of the first metals discovered by mankind

Gold was one of the first metals discovered by mankind as it was closer to the earth surface than many others. According to many historical sources the discovery of the gold might have happened as early as 8000 B.C. The familiarity that the humans had with the metal led to high level of trust.

Gold does not cored and hence does not loose its value

This makes possible to be transferred to next generations. Such thing is impossible with many other commodities such as iron, food or oil for example In addition to that gold is very dense which means that it is easier to carry & handle than a sack of rice or a barrel of oil.

Gold has always had a stable supply across centuries

Finding and mining gold is difficult. This means that it does not lose value fast as a result of oversupply. In comparison, it is very simple for any government to print more money and thus erode the value of its currency.

Gold is the most malleable metal

That means that it is very easily handled or manipulated. Furthermore it has only one grade and thus only one pricing. If you deal with oil or diamonds there is a multiplicity of quality levels and grades.

Gold has very limited industrial use

According to many researches only 10%-15% of the metal is used in the industry. Thus, you are not taking away a valuable industrial commodity for trading. This is not the case with silver and platinum, whose industrial use is much wider.

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