For a commodity to function effectively as money it must be

Money has four main functions: standard of deferred payment, store of value, medium of exchange, and unit of account.  Money can also be defined as an item or medium of exchange that symbolizes perceived value. People generally accept it for the payment of goods and services, as well as the repayment of loans.  There are many types of money, including: Fiat money: Notes and coins backed by a government Commodity money: A good that has an agreed value, such as cowrie shells, bars of salt, furs, feathers, and cattle Fiduciary money: Money that takes its value from a trust or promise of... Show more

Money has four main functions: standard of deferred payment, store of value, medium of exchange, and unit of account. 

Money can also be defined as an item or medium of exchange that symbolizes perceived value. People generally accept it for the payment of goods and services, as well as the repayment of loans. 

There are many types of money, including:
Fiat money: Notes and coins backed by a government
Commodity money: A good that has an agreed value, such as cowrie shells, bars of salt, furs, feathers, and cattle
Fiduciary money: Money that takes its value from a trust or promise of payment
Commercial bank money: Credit and loans used in the banking system
Credit money: Also known as bank money, this is money that is not money in reality but performs all the functions similar to money

Related Test: Money, Banking, and Financial Markets Practice Test: The Basics

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