Supply and Demand of a commodity are unpredictable so the amount of money is unpredictable. Gresham s Law Sir Thomas Gresham in the 16 th century developed the theory with regards to commodity money called Gresham s Law. He said bad money drives out good money. People tend to trade away inferior money and hoard the best. This is the number 4 problem with commodity money.
Coins When using commodity money, quality is a big issue.
Remember Gresham s Law. When people used gold and silver, they would cut the pure gold and silver with nonprecious metals to make up the weight. You would be cheated if you dealt with them. The value was questionable. To stop this problem, coinage was developed.