Commodity money has intrinsic value and serves as a means of exchange, examples include precious metals like gold and silver.
Commodity money is the type of money that has intrinsic value in and of itself as well as value as a means of exchange. Examples include precious metals like gold and silver, which were historically used as commodity money due to their inherent value.
In ancient societies, various items such as shells, cattle, grain, and precious metals were used as commodity money because their value was derived from the commodity itself, making them valuable for trade and exchange.
Money serves multiple functions like being a medium of exchange, a unit of account, a store of value, and a standard of deferred payment. Commodity money has value beyond serving as a medium of exchange, setting it apart from fiat money which has no intrinsic value.
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