Say humans, for some reason didn't like gold or silver(altough it isn't as accepted as gold anyway) at all, in this case, how would the term currency would come to be? Would it function like how most currencies work nowawadays? ( Based on "Trust" without any kind of real world liquid materials whatsoever ) or would humans find a way to use resources (like iron or something with actual value as you can produce stuff from it) as a basis for exchange?(altough huge fluctations in supply and hence value will occur) or would they just declare something "fake gold" and control it's supply that so it is as universal as gold? (something like this)

also a side question, would gold prices theoratically plummet if someone were to put a huge amount of gold into the circulation of economics that they extracted?

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  • $\begingroup$ I’m voting to close this question because it is about unknowable hypothetical situations, and as such, it is off-topic here. $\endgroup$
    – Giskard
    Jan 13 at 19:52

It would work the same way as it worked with gold just with some other commodity. Currency is just particular kind of money.

Anything that fulfils three basic function of money is money and thus can be considered currency. These functions are:

  • medium of exchange
  • unit of account
  • store of value

Historically many things served as money. For example, at island of Yaap large stones were used as local currency (see this NPR article). Cattle or other agricultural products or shells were also used as money (see article about that here). In fact metallic currencies are relatively new as first metallic currencies appeared around 3000 B.C. but we have evidence for existence of commodity money as far as 6000 B.C. Coinage is even more later invention appearing around 1000-500 B.C.

People switched to metals because metals are easily divisible and you can transport a lot of value in them relatively easier (e.g. it would be easier to transport single gold coin from A to B than equivalent value in bushels of wheat).

If people would have some "allergy" to gold or silver they would just use other metals or other non-metallic commodity money that from economic perspective works in exactly the same way until fiat or fiduciary currency would be invented at some point.

Any money can be used to facilitate trade, only difference that avoiding metals would make is that large international transactions would be slightly more expensive to make due to higher transportation costs.

  • $\begingroup$ answers the question, thanks. $\endgroup$
    – logic
    Jan 14 at 20:48

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