Desirable features

To be a medium of exchange

* It should have liquidity, and be easily tradable, with a low spread between the prices to buy and sell, in other words, a low transaction cost.

* It should be easily transportable; precious metals have a high value to weight ratio. This is why oil, coal, vermiculite, or water are not suitable as money even though they are valuable. Paper notes have proved highly convenient in this regard.

* It should be durable. Money is often left in pockets through the wash. Australian bank notes are made of plastic for durability. Gold coins are often mixed with copper to improve durability.

* It should minimize contamination and contagion. Since money is frequently handled it becomes a pathway for infectious disease transmission. Recent studies have shown that the area in business offices that show the highest contamination by disease causing organisms is the accounting office where money must be counted and handled. Unlike paper, silver, as well as platinum and titanium, is used as an anti-bacterial and anti-viral agent. This property of silver has been recognised for millennia and used for eating utensils.

To be a unit of account

* It should be divisible into small units without destroying its value; precious metals can be coined from bars, or melted down into bars again. This is why leather, or live animals are not suitable as money.

* It should be fungible: that is, one unit or piece must be exactly equivalent to another, which is why diamonds, works of art or real estate are not suitable as money.

* It must be a specific weight, or measure, or size to be verifiably countable. For instance, coins are often made with ridges around the edges, so that any removal of material from the coin (lowering its commodity value) will be easy to detect.

To be a store of value

* It should be long lasting, durable, it must not be perishable or subject to decay. This is why food items, expensive spices, or even fine silks or oriental rugs, are not generally suitable as money.

* It should have a stable value.

* It should be difficult to counterfeit, and the genuine must be easily recognizable.

To be anonymous

* Money should not be subject to government tracking.

* It should be useable for purchases in a black market.

* It should not require equipment, tools or electricity to use.

Money also is typically that which has the least declining marginal utility, meaning that as you accumulate more units of it, each unit is worth about the same as the prior units, and not substantially less.

For these reasons, gold and silver have been chosen again and again throughout history as money in more societies and in more cultures and over longer time periods than any other items.

One key benefit of these features of money is that it facilitates and encourages trade, as barter is far less efficient.

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