Properties of Good Money and Its Evolution

Money has existed in many forms including shells, metal, paper, and digital. Some forms work better than others. The six key properties are: Scarcity means supply is limited or hard to increase quickly. Divisibility means it can be used in small and large amounts. Portability means it is easy to carry or transfer. Durability means it does not break down easily. Fungibility means each unit is treated the same as any other unit. Acceptability means people agree it can be used to pay and store value, and depends on who you are trading with and where you are. A bonus property is Verifiability, meaning people can easily check that it is real. Key concept terms include: Good money is money people prefer to keep because it holds value better over time. Bad money is money people try to spend quickly because they trust it less. Sound money is a system where money is hard to debase and tends to hold value better over long periods. Gresham's law says when two monies are forced by law to trade at a fixed rate, people tend to spend the money they think is overvalued and save the money they think is undervalued.