How Coins Are Made and Sold
A coin is a metal or, rarely, some other material that carries a symbolic value of a particular amount of money. Coins are generally thought of as a form of cash because they can be used to buy goods and services from businesses or individuals. Although coins are still used for many purposes, most of us now use credit cards and digital wallets when paying with money. Some people also prefer to exchange cash with friends and family, using services like Zelle or Venmo.
Although coins can be made from a variety of precious metals, most are not backed by any significant quantity of those metals. Instead, most coins are backed by a government guarantee (sometimes called fiat money) or some other form of official authority, much the way paper currency is backed by government bonds. This means that a gold-backed coin would have a much higher price than one minted of copper or nickel.
When a country produces coins, it usually makes them from a metal that is easily worked and cheap to manufacture. The United States Mint, for example, produces most of its circulating coins from large sheets of metal that are rolled into coils. The Mint then cuts the coils into circular blanks that are ready to be pressed into coins.
To design a coin, Mint artists make a sketch of what they want the obverse (front) and reverse (back) to look like. Then they use the sketch to create a model, which they can sculpt in clay or create digitally. The model is then transferred to a die that stamps the coin blanks with the design. Finally, the blanks are weighed and counted to ensure that each one is complete. Then they are put into large bags and shipped to Federal Reserve Banks all over the country.
Each year the U.S. Mint produces about three billion coins. But less than 20% of those coins get into circulation. Most of the rest are re-used, passing from bank to store and back again and again. Each time a coin is used for a purchase, it enters circulation (Circulate). When you take worn (“uncurrent”) coins to the bank or your local piggy bank, you are taking them out of circulation (Take out).
In most societies, the value of a coin depends on its intrinsic or exchange value. The rarest and most valuable coins are those produced from the most precious metals, such as gold and silver. But the majority of coins circulating today are made from base metals, such as copper and nickel.
Historically, monarchs and governments coined more coins than their precious metal supplies could support if they were pure. To compensate, they reduced the precious metal content in the coins by replacing it with a more common metal. This is known as debasement, and it often leads to price inflation. Today, most countries’ currency is primarily a token of the government’s power rather than a store of value.