Which form of money directly derives its worth from the material itself?

Commodity money is a form of currency that has intrinsic value, meaning its worth comes from the material from which it is made. Historically, items such as gold, silver, and other precious metals, as well as commodities like salt and cattle, served as commodity money. The value is tied directly to the commodity itself, making it a tangible asset.

In contrast, representative money derives its value from a promise to exchange it for a commodity. An example would be banknotes that can be redeemed for a certain amount of gold or silver. Fiat money, on the other hand, has no intrinsic value; its value is established by government regulation and public trust. Cryptocurrency is a digital or virtual currency that functions independently of a central authority, generally lacking intrinsic value tied to a physical commodity.

Therefore, commodity money is unique in that its value is based on the material it embodies, distinguishing it clearly from other forms of money that rely on trust or representation.