Question

The average person thinks of the currency in her wallet or funds in her account when she thinks of the word “money,” but economists think about the concept of money in a much broader sense. What are the key features something needs to possess to be considered money, and what are some examples of things that have been used as money historically? Bitcoin and other cybercurrencies are frequently in the news now; do you think they should be considered money? Why or why not?

When you make your initial post, please fully answer the question and make substantive responses - i.e. at least 400 words that really dive into the topic and show that you've read the text and done research to support your opinions.

Answer 1

As per a common person's defintion of money, it cant be restricted to just curreny notes and the funds stored in the bank account. Money is often defined in terms of the three functions or services that it provides. Money serves as a medium of exchange, as a store of value, and as a unit of account.

• Store of Value: If a person earns some money today she can store the value of money till the next day/week/year etc. However the money in terms of currency notes may decrease in value due to inflation and in terms of commodities for eg: grains may decrease in value due to rotting.
• Medium of exchange: Money is medium of exchange which means if she goes to any store within here country she can use it buy anything she wants as it is a legal tender and the vendor has to accept it.
• Unit of account: Money is a unit of account. You can think of money as a yardstick-the device we use to measure value in economic transactions.If you are shopping for a new computer, the price could be quoted in terms of grains, livestock, or currency.

Historical examples

• In earlier times Barter System was popular. Barter is the exchange of resources or services for mutual advantage, and the practice likely dates back tens of thousands of years. It would consist of exchnage of livestock,shells.grains etc.
• Around 500 BC. modern coinage developed and first coins developed out of lumps of silver. They soon took the familar round form of today, and were stamped with various gods and emperors to mark their authenticity.
• Currently the money we accept is denoted by currency notes,coins etc

Cybercurrencies:

As we know the dollar today is more valuable than the dollar tommorow. There has been development of other forms of currency and a major addition to this are the cybercurrencies or cryptocurrencies. Digital cash in the form of bits and bytes will most likely continue to be the currency of the future as there could be considered a great substitute to breaking barriers of exchange and may also provide a great hedging substitute.

Advantages : lower fees,fraud detection,removal of barriers,competitive advantage etc.

Drawbacks : Legal restrictions,cybersecurity issues,price volatility etc.