Commodity money has intrinsic value, meaning it is valuable in its own right. Examples include gold, silver, and other precious metals. These materials are rare, durable, and easily divisible, making them suitable for use as money.
2. Fiat Money
Fiat money, on the other hand, does not have intrinsic value. Its value is derived from the government's decree or fiat that declares it to be legal tender. Paper money and coins are examples of fiat money. They are valuable because people have confidence that they can be exchanged for goods and services.