1)Does bitcoin fulfill the three functions of money and the six characteristics of money? 2)What is...

1)Does bitcoin fulfill the three functions of money and the six characteristics of money?

2)What is bitcoin?

3)Do you think bitcoin or some other type of currency will be the future of money? Why and what other types of money will evolve?

Expert Solution

Q.1.

There are three main functions of money - medium of exchange, store of value and unit of account.

Medium of exchange to facilitate transactions - satisfied by bitcoin
Store of value - In order to be a medium of exchange, money must hold its value over time but with high fluctuation, bitcoin can’t be used for storing value and paying debt - Not satisfied.
Unit of account - a common measure of the value of goods and services being exchanged - satisfied.

Six characteristic of money -

Durability - Bitcoin is completely digital, so it will not degrade with use.
Portability - Bitcoins are easy to carry and transfer.
Divisibility - BTC is perfectly divisible (currently divisible up to 8 decimal places)
Uniformity - BTC is uniform. Currently, all bitcoin are considered equal.
Limited supply - The supply of bitcoin is tightly controlled and highly predictable.
Acceptability- Bitcoin is only accepted by a small fraction of web sites currently. While this number grows on a daily basis, it is still the vast minority of merchants.

Rahul Sunny answered 1 year ago

“bitcoin.” For one of the “functions of money” identified and explain why bitcoin does or does...

“bitcoin.” For one of the “functions of money” identified and explain why bitcoin does or does not meet that recognized function of money. For the Libra, as proposed explain how it will or it will not meet one of the functions of money. Libra, how is it different from PayPal© or ApplePay©?

Explain the concept of money. What characteristics and what functions does something have to have/perform to...

Explain the concept of money. What characteristics and what functions does something have to have/perform to be considered money by economists. What is the fundamental difference between commodity money and fiat money? How has the social creation of money affected the ability of humans to achieve Economic Growth?

1. Describe the functions of money. 2. What is fiat money? What is commodity money?

1. What is money and list the three functions of money? Which function is the most...

1. What is money and list the three functions of money? Which function is the most important? 2. Describe the organizational structure and functions of the Federal Reserve Syste 3. What is the difference between money market instruments and capital market instruments?

A) What are three major functions of money? B) How does the FED increase the amount...

A) What are three major functions of money? B) How does the FED increase the amount of money in the banking system? C) What are the three main parts of the FED? What does each do? D) Explain the meaning of central bank independence

What are the four functions of money? Can something be considered money if it does not...

What are the four functions of money? Can something be considered money if it does not fulfill all four functions? Please give an example.

1.Can ice cream be money? Answer the question considering the three functions we discussed. 2. What...

1.Can ice cream be money? Answer the question considering the three functions we discussed. 2. What does it mean “fiat money” and why the modern economies moved to this payments system? 3. What are the small denomination time deposits? Why are they in M2 and not in M1? 4. Calculate the deposit multiplier in the case of a reserve requirement of 15 percent. 5. What is the relation between the reserve requirement and the deposit multiplier? Discuss and provide one...

1. a. What are the three functions of money? Give a brief description of each. (0.3...

1. a. What are the three functions of money? Give a brief description of each. (0.3 point) b. If money is anything that fulfills the three functions of money, do you think that a credit card is money? Yes or no? Explain. (0.2 point) 2. The federal reserve system, also called the Fed, is the central bank of the United States of America. What are the main powers of the Fed? (0.4 point) 3. a. What did the FOMC said...

Describe the three functions of Money?

Q14.1 What are the functions of money? Q14.2 How does the existence of money simplify the...

Q14.1 What are the functions of money? Q14.2 How does the existence of money simplify the process of buying and selling? Q14. 3 What is the double coincidence of wants? Q14.4 What components of money are counted in M1? Q14.5 What components of money are counted in M2? Q14.6 How can a bank end up with a negative net worth? Q14.7 What is the asset-liability time mismatch that all banks face? Q14.8 How do banks create money? Q15.1 Why is...

Question