Economics/Money?

Question

What characteristics of an asset make it useful as a medium of exchange? As a store of value?

Answer 1

Non-perishable: would you really want to use mouldy old bananas as money? Similarly, ice cubes aren't much good except at the north and south poles.

Small: so that you can carry it. There is an example of natives on an island somewhere that used really huge rocks, but if you want to buy something from someone 100 miles away, would you want to have to drag a 4 ton boulder 100 miles?

Rare: you could use grains of sand, but everyone could just go and pick up as much sand off the ground as they wanted, so it won't keep its value. Similarly, some countries have printed so much money that their notes and coins became worthless due to hyperinflation.

Widely accepted: some countries use pigs and other animals, but pigs would be useless in a country where people consider pigs to be dirty, so you would have use something else to trade with those countries.