Hard Currency vs. Soft Currency

Hard Currency vs. Soft Currency

So, I've decided to continue doing Economics for a little bit and wanted to cover and clear up any misconceptions about hard vs. soft currencies for anyone interested.

Hard Currencies are things such as gold, silver, copper, etc.

Soft Currencies are things such as dollars, yuans, yens, etc.

The main difference is that one is well. Hard....and one is....well, soft.

Let me explain a few key interpretations. 

By Hard I mean literally, hard. If you study geology and know of Moh's Hardness Scale then you'll understand the term "hard" in the right context. The reason why diamonds are so valuable is not because they are shiny and cool, it's because they are incredibly durable and difficult to break. In fact, diamonds can only be cut by other diamonds or lasers. 

A currencies' hardness is not always its value. The harder a currency the more valuable it is as a currency in terms of durability. However, the purpose of a currency being hard is so it is durable, and not susceptible to wear and tear over time not strictly as an indicator of value although the reason individuals tend to attribute higher value to harder currencies is BECAUSE it is so durable. Durability and Value, therefore, are not dependent upon one another due to existential constraints and are actually independent of one another.

Typically, you'll find that hardness does imply higher value as a small diamond or small piece of gold dust can fetch far more than a large (by size comparison) U.S. Dollar made of paper.