|MadSci Network: Chemistry|
Coins are made of metal partly for historical reasons (that's what they've always been made of!) But the ancients had good reasons for making their coins of metal.
But paper money, which like stone and wood has little or no intrinsic value, can only function in a stable economy, while coins (made of metal which is valuable in itself) can function in any economy. Nobody buries bags full of paper money in the back yard, but people have done that with coins throughout history. (A numismatist friend of mine tells me that this is why coins from certain politically unstable periods are relatively common.)
Nowadays, some metals are so cheap that they function like paper, and Germany (for example) makes 1- and 5-mark coins from aluminum, which has little intrinsic value. For that matter, US and Canadian dollar coins are stamped from metal which is worth 1/5 or less of their face value. But coins are still made of metal because metal is easy to work and durable; more so than plastic, the alternative which springs to mind.
And metal has another value these days: coin-operated vending machines need metal coins so they can tell real coins from counterfeits by the detailed electromagnetic properties of the coin. If you read about how the new US dollar was designed, you will find that this was a major constraint.
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