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A big issue with any precious metal as primary unit of exchange is trust that the coin is what it claims it is. The trust isn’t just a given it’s a continuation
by rtkwe 6y ago
A big issue with any precious metal as primary unit of exchange is trust that the coin is what it claims it is. The trust isn’t just a given it’s a continuation of the trust in the minting government to mint good coins and to pursue counterfeiters and the difficulty at the time of making quality coins.
Gold is decent for it but not so much now that we can easily gold electroplate a thick layer on to any metal to pass a cursory acid test. Silver has the added downside that it tarnishes easily.
- dragontamer 6y agoThere are also widely available acid-tests for silver. There are also electrical-conductivity, thermal-conductivity tests (both gold and silver are superior electrical and thermal conductors), and weight / density tests. They all can be defeated one-at-a-time. Gold can have tungsten drilled into it for example (beating acid tests and weight tests), but that won't beat the thermal conductivity test because tungsten won't transfer the heat out as quickly. > Silver has the added downside that it tarnishes easily. And gold doesn't retain its shape. The solution to "tarnishing" issues (or in the case of gold: losing their shape), is to use 90% coins instead of 100% coins. The 10% alloy will be sufficient to reduce tarnishing, add structural stability, or whatever. For example, a 1oz American Gold coin weighs 1.09 Oz.
- rtkwe 6y agoThe issue isn't so much the existence of tests as it is the friction the uncertainty introduces to commerce. (Although in a post-collapse situation maintaining those tests does become an issue long term, I used gold tests for years and only barely know what's in them much less how to make the component acids.)