While a number of "things" have been used as money, some have worked better than others. Those "things" that did not work so well were replaced by other "things" that worked better. Those "things" that worked best tended to have four basic characteristics: (1) durability, (2) divisibility, (3) transportability, and (4) noncounterfeitability.

Durability

Durability is critical for money to perform the related functions of medium of exchange and store of value. People are willing to accept an item in payment for one good because they are confident that the item can be traded at a later time for some other good. An item works as a medium of exchange precisely because it stores value from one transaction to the next. And this requires durability.

Refined metals, such as gold, silver, copper, or nickel, have historically taken center stage as money because they are extremely durable materials. An ounce of gold today will be an ounce of gold tomorrow, next week, and a thousand years hence. Organic products, such as lettuce, ice cream, or raw meat, are seldom if ever used as money because they are extremely perishable. A crisp leaf of lettuce might not be recognizable as lettuce next week let alone a thousand years hence.

While physical durability has been historically important for money, social and institutional durability is also important for modern economies. The durability of modern money, especially paper currency and bank account balances, depends on the durability of social institutions--especially banks and governments. While government-issued paper currency might remain physically intact for centuries, its ability to function as money depends on the institutional durability of the government.

Divisibility

Divisibility is one reason why metals, such as gold, silver, copper, and nickel, have been widely used as money throughout history. As pure elements, each can be divided into really, really small units, in principle, down to the molecular level. In contrast, livestock, which has seen limited use as money in less sophisticated agrarian societies, never become widely used as money in modern economies. Dividing live water buffalo into increments small enough to buy bubble gum is highly impractical.

For example, U.S. money, both paper currency and bank account balances, comes in increments of one penny, sufficiently divisible to accurately match the value of virtually every good and service available in the economy. If U.S. money consisted exclusively of $100 gold coins, and nothing smaller, people would have problems buying goods such as soft drinks, gasoline, or bubble gum. These goods, and millions more, have values that cannot be rounded to the nearest $100.

Transportability

Once again, transportability has played a key role in the use of metals like gold, silver, copper, and nickel as money. Carrying around a satchel of metal coins was never much of a burden. However, these metals were largely replaced by paper currencies in the 20th century because paper was lighter and easier to carry. In fact, a $100 bill is just as easy to carry as a $1 bill. This notion has been taken a step farther with paper checks used to access checking account balances. A check for $1 million is just as easy to transport as a check for $1.

Items such as granite blocks, radioactive plutonium, and maple syrup come up short on the transportability scale. Items that are physically heavy relative to their value in exchange, or need special handling, are not easily transportable. Heading off to the market with a vat of syrup or a lead canister of plutonium just does not work. And who wants to lug blocks of granite around the shopping mall?

Noncounterfeitability

Preventing the unrestricted duplication of money is a task that has long been relegated to government. In fact, this task is one of the prime reasons why governments exist. An economy needs government, ABSOLUTELY NEEDS government, to regulate the total quantity of money in circulation. By controlling money duplication, governments are also able to control the total quantity in circulation, and this control is what gives money value in exchange.