Concept: August 8, 2021. Understanding Money

Picture Steemit SteemLeo World Finance.jpg

Money is anything that can be used as a medium of exchange. It is the next level of sophistication after bartering. It is defined by the people. If people decide that plastic buttons are money, then that is what money is.

Money has 3 functions. It is a medium of exchange, a unit of account and a store of value.

As a medium of exchange, it resolves the problems that bartering brings (it may be difficult to trade the banana for the water if someone does not need the banana or the water). There is no doubt that when humans started to trade they bartered. However, as the primitive economies grew more complex a medium of exchange had to emerge as a way to correct the uncertainties and unfairness of bartering.

As a unit of account, money is a consistent means of determining the value of things. When we give value to things, we express it in the form of an amount of money, which is understood by people accepting that kind of money.

As a store of value, money keeps its value over time. 50 dollars will be 50 dollars always. It can be utilized as a standard for payments to be made in the future. However, inflation may reduce what those 50 dollars can purchase as time passes.

This post is intended to only raise awareness. In order to make actual financial decisions please contact your financial advisor and/or tax advisor prior to making the decision.
H2
H3
H4
3 columns
2 columns
1 column
9 Comments
Ecency