All forms of money serve as a ‘medium of exchange’, and ‘unit of account’, which is convenient and flexible compared to barter. Key Point: Note that when a valuable commodity (such as gold) is used as money (‘monetization of gold’), the money is worth as much as the goods or services in the transaction. It is not just a ‘symbol’ or ‘measuring device’. This is also true of barter, but with gold’s high value per weight and volume, etc., using gold is more convenient, and thus helps improve commerce.
Two more benefits of using commodity money are to; 1. Limit excessive expansion of the money supply (inflation; loss of value) by the government, and 2. Provide a market-based, and stable, store and measure of value, with coins and paper notes produced by private mints (including banks). Mints would not require a license, and there would be no legal tender laws, since that would put the government in control. The only government function would be inspections (which could also be done by a private org) to verify that the mints indeed have the gold reserves they claim to have for redeeming paper notes. The commodity used as money could be (and has been) wheat, iron, diamonds, notched sticks, or pearls, but the market (users of money) usually chooses gold because it works best.