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- Scarcity: Generally speaking, the scarcity of a currency will play an important part in determining its value. Imagine a currency being as commonly found as blades of grass. Everyone would have access to them in huge volumes, thereby reducing each one's value. In contrast, a currency that is in short supply, whether that's naturally or through control, would be more valuable.
- Divisibility: To be suitable for a wide range of uses, a successful currency must be divisible into smaller amounts. A currency that can only be broken down into half units is no use if there are items available for sale at values of 100th units.
- Acceptability: In order for a currency to work, it must be perceived to be valuable by both the government and the people who intend to use it. This is the reason why there's such a definition as legal tender: it's the currency that has been deemed acceptable for economic activities in a particular region. If people see no value in a currency, they have no reason to accept it.
- Portability: This factor is all about logistics. When gold was a dominant form of currency, it was quickly realised that carrying around chunks of the precious metal was far from practical. This is why modern currencies are created as small, easy to carry tokens, such as coins and paper notes.
- Durability: Whatever form a currency takes, it must be able to withstand changing many millions of hands, otherwise it would be far too easy to destroy, resulting in loss of value. That's why today's currencies are made from sturdy, hard wearing materials such as metals and plastic coated paper.
- Uniformity (counterfeit-proof): A currency's form must also be the same for each iteration. One penny in the currency must be the same as every other penny in that currency. This is a way of retaining the money's value but it also serves another purpose: to prevent counterfeiting. Several measures are used to prevent the easy copying of coins and notes, such as intricate designs, watermarks and holograms.
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