> what if the US would use actual physical gold coins instead of dollars?
The problem here is, what if the demand for dollars increases?
In principle the US would get more gold and mint more currency, but gold is a finite resource. "All the gold ever mined" is around 200,000 metric tons, ~32k troy ounces per metric ton is ~6.4B troy ounces.
In 2022 (just before the recent gold rally) the price was ~$2000 per troy ounce, i.e. "all the gold" was worth ~$13T. Meanwhile the M3 money supply in the same year was ~$20T. What happens if you try to buy $20T worth of gold to mint currency when only $13T worth has ever been mined, and not all of that is even on the market? The answer is that you can't, so instead the result is deflation, which is bad.
Or to put it a different way, what do you think the economic effect of the recent gold rally would be for a country whose currency was still pegged to gold? It just got way cheaper to import foreign products than buy domestic ones, and way more expensive for foreign countries to buy your exports, so how's the unemployment rate looking? The amount everyone owes on their mortgage hasn't changed but the nominal value of their houses just got cut in half so now they've lost their jobs and are underwater. What happens when they start to default and foreclosures don't allow the banks to recover the principal?
The primary function of money is its trade value, to "lubricate" the real economy to let goods and services flow. When the value is unstable, people are inclined to not spend or not accept that currency, which contradicts the free flow of it and in severe cases harms the economy.
Crypto'currencies' have the same problem. By nature, they are no currency but investment for which instability is required. No crypto bro would hype their 'currency' because there would be no pumping. Arbitrage trades are considered being for fools or insiders.
Bitcoin has the same problem. There is no inherent reason you can't have a cryptocurrency where there is no maximum number of coins to ever be mined and instead the limit is that mining them requires a fixed amount of computation.
That would give you the characteristics you want from a medium of exchange, because there is a rate limit on how much can be created (doing so requires e.g. electricity). Then the value is relatively stable, if you accept it as payment on Monday it would still be worth around the same amount on Friday, but the long-term result is a slow reduction in value on multi-year timescales as compute gets cheaper, so you don't get the speculation that results in high volatility and it doesn't strongly compete with real economic activity for investment resources.
The argument you'll get from goldbugs and whatever is that nobody would want a currency which is inherently inflationary like that, but that's clearly contrary to evidence. Most government currencies are inflationary, even on purpose, and it doesn't matter as long as the rate of inflation isn't so high that people holding it transiently for use as a medium of exchange are losing a significant amount in that short period of time. Especially when the rate of inflation is predictable (the rate at which computers get faster is reasonably consistent) so that anyone entering into a long-term contract denominated in that currency can reasonably predict its future value on the delivery date. Or people could just use it as a medium of exchange and denominate their contracts in something else.
You are right, the harm of unstable currencies is a matter of public perception but boiling the frogs slowly still does harm. Inflation is a significant, longterm, bottom-up wealth pump and simply pointing to empirical evidence is a point against unstable currencies, not for them.
How cryptocurrencies are mined is secondary in that regard too because their values is also purely based on perception, since there is no large authoriry backing that currency by eg. demanding , spending and regulating it.
The problem here is, what if the demand for dollars increases?
In principle the US would get more gold and mint more currency, but gold is a finite resource. "All the gold ever mined" is around 200,000 metric tons, ~32k troy ounces per metric ton is ~6.4B troy ounces.
In 2022 (just before the recent gold rally) the price was ~$2000 per troy ounce, i.e. "all the gold" was worth ~$13T. Meanwhile the M3 money supply in the same year was ~$20T. What happens if you try to buy $20T worth of gold to mint currency when only $13T worth has ever been mined, and not all of that is even on the market? The answer is that you can't, so instead the result is deflation, which is bad.
Or to put it a different way, what do you think the economic effect of the recent gold rally would be for a country whose currency was still pegged to gold? It just got way cheaper to import foreign products than buy domestic ones, and way more expensive for foreign countries to buy your exports, so how's the unemployment rate looking? The amount everyone owes on their mortgage hasn't changed but the nominal value of their houses just got cut in half so now they've lost their jobs and are underwater. What happens when they start to default and foreclosures don't allow the banks to recover the principal?