Money. We handle it every day, whether with a card, a check, or cold hard cash. But what is money really?
It’s a common misconception that American currency is equal to that in gold. In fact, back in 1971, President Nixon severed the ties between the dollar and gold. So if it’s not gold, then why do we value it so much? To answer this question, let’s go back a while to the beginning of currency. Early money was commodity based, meaning that the currency itself, whatever it may be, was universally valued. For example, a hundred nails would be equivalent to one slave, ten cows, or 20 bushels of apples, depending on the area. Over time, currency developed criteria; other than being universally valuable, it also had to be durable, portable, divisible, and scarce (but not too scarce).
Which brings us back to gold. Gold became one of the easiest and first choices for currency. Due to its beauty, low melting point, and natural availability, gold became the key currency for cultures and people all over the world.
Take a look at this infographic for more on what money exactly is and why we value it so much. Let us know what you think in the comments and don’t forget to like and share with your friends.
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