The reason
gold was chosen as the
de facto currency for most of human history is based on two factors. First, it was
scarce and hard to mine. Second, its low
melting point, chemical stability and high
mass make its authenticity easy to
verify.
As long as human
economies were based on
agriculture, gold worked very well as a currency. Because it was hard to fake, and hard to obtain, the money
supply was essentially fixed. Agricultural economies are also fixed, with the quanity and quality of
land essentially a fixed variable. So much land produced so much economic activity. Any
commodity that was stable in supply would work. Gold fit that description to a tee.
Gold became inadequate when economies moved from agriculture to industry. Suddenly economic activity was capable of rapid, exponential change as innovation and other technological factors began to drive production. At that point a growing economy needed a more fluid currency, whose supply could be varied as needed. The stability in supply that worked so well in an agricultural economy was completely inadequate for more modern economic models. Hence the abandonment of the gold standard. It worked for centuries, but progress has made the gold standard obsolete.