Category: Currency

Usually, when we make a transaction, the payment is processed by a credit card company or a bank. However, this could lead to risks such as protecting data from hackers, taking longer for international payments and expensive. Therefore, cryptocurrency helps to keep data secure and protected using mathematics as it only exists in computer networks. With digital currency like Bitcoin and Ethereum, the media attention has gained as there’s public knowledge in the modern marketplace.

The main argument in favor of cryptocurrency is blockchain technology providing secure area meaning there’s an advantage of high-level security. Blockchain technology is a ledger in a network of computers that is open to anyone. However, once data has been recorded inside a blockchain it becomes exceedingly difficult to change it. This system has been particularly useful as it helps track money in individual accounts and have easy access to any stolen coins. Also, the use of blockchain technology has helped to address fraud risks through technology because the transactions are transparent and cannot be changed. By providing strong security, more consumers are leaning towards cryptocurrency to keep their finance safe as hackers find it difficult to invade the system due to high focus on cyber-attack. Furthermore, it helps individuals during auditing as it assures you that no transaction can be changed. Furthermore, they provide Cryptocurrency Security Standard (CCSS) which is required for all information system that uses cryptocurrency. It has enabled cryptocurrencies like Bitcoin to have high level of security and transparency when dealing with transaction.

On the other hand, cryptocurrency is highly volatile making the prices fluctuate quickly. As it lacks intrinsic value, cryptocurrency is not backed by traditional currency as its purely digital currency. This means that their value is completely unpredictable and hard to measure. Although cryptocurrency gets lots of attention from the media, it is still relatively small which means it easy to take advantage and manipulate for prices, their customers, liquidity, and price feeds. This could lead to disbalance and decline for the market as prices have higher impact due to small market size and therefore impact investors. Having a volatile nature, the market stays unpredictable and going to affect investments as it becomes too risky to invest in cryptocurrency as there’s fluctuation in prices. From cryptocurrency currency chart data, it shows prices tend to fluctuate 2%-10% per days. This means that risk-averse people are unlikely to invest in the currency as it could lead them to financial difficulty.

In conclusion, this essay has discussed both arguments about cryptocurrency and the interest it gained from media over the past years. Cryptocurrency has changed the way we save, invest, and buy. As the world is developing cryptocurrencies are known to be new technology and dominate the future currency. Due to its high security, it attracted a large number of spectators and the media. This means that it will be widely acceptable and available globally as the demand increases. This creates a positive future for cryptocurrency as the market improves and expands.

Did you know there are only two people that weren’t presidents on our U.S. dollars? There are some familiar faces on the U.S. dollars as we see today. There were presidents on U.S. dollars, but not on every dollar, two were never presidents at all actually. Benjamin Franklin and Alexander Hamilton are on the ten and one hundred dollar bills. In fact, Franklin and Hamilton were not U.S. presidents at all.

According to www.treasury.gov, U.S. currency has the following: George Washington on the one dollar bill, Thomas Jefferson on the two dollar bill, Abraham Lincoln on the five dollar bill, Alexander Hamilton on the ten dollar bill, Andrew Jackson on the twenty dollar bill, Ulysses Grant on the fifty dollar ill, and Benjamin Franklin on the one hundred dollar bill. This proves that not only presidents are on our U.S. currency, but two are the founding fathers of the United States. The two founders are Benjamin Franklin and Alexander Hamilton, which is a big name to live up to. There are a variety of currency notes that are no longer made. These include the five hundred dollar bill with the picture of William McKinley, the one thousand bill with a picture of Grover Cleveland, and the $5,000 bill with a picture of James Madison, the $10,000 bill with a picture of Salmon Chase, and the $100,000 currency note with a picture of Woodrow Wilson. These currency notes all are very rare and history bills to find in the U.S. today.

According to www.advfn.com, the Coinage Act of 1792 helped put together a very neat monetary system that introduced coinage in gold, silver, and copper. Paper notes or greenbacks were introduced into the system in 1861 to help finance the Civil War. According to www.thebalance.com, the value of money is determined by the demand for it, just like the value of goods and services. There are three ways to measure the worth of the dollar today. The first is how much the dollar will buy in other currency, foreign countries to be exact. That is what called the exchange rate. Forex traders on the foreign exchange market decides different kind of exchange rates in other countries. They take into account supply and demand, and then factor in their expectations for the future.

Furthermore, before notes/bills were introduced or created there were coins. Coins was first made in 1793. All of the were made from 100 percent from copper. According to www.thesprucecrafts.com, also some coins are made with ridget rounds and the sum are made with smooth rounds to tell the difference. This helps people out that are blind or nearly blind.

In conclusion, U.S. currency is what helps people take care of their daily needs. Without currency it would be a disaster in the U.S. Money keeps everything running in the same cycle as it is today. Overall, currency is an important item in this free country we call America.

As used in everyday conversation, the word money can mean many things, but to economists it has a very specific meaning. To avoid confusion, we must clarify how economists’ use of the word money differs from conventional usage. Economists define money (also referred to as the money supply) as anything that is generally accepted as payment for goods or services or in the repayment of debts. Currency, consisting of paper bills and coins, clearly fits this definition and is one type of money. When most people talk about money, they’re talking about currency (paper money and coins). If, for example, someone comes up to you and says, “Your money or your life,” you should quickly hand over all of your currency rather than ask, “What exactly do you mean by ‘money’?”.

To define money merely as currency is much too narrow a definition for economists. Because checks are also accepted as payment for purchases, checking account deposits are considered money as well. An even broader definition of money is needed because other items, such as savings deposits, can, in effect, function as money if they can be quickly and easily converted into currency or checking account deposits. As you can see, no single, precise definition of money or the money supply is possible, even for economists.

To complicate matters further, the word money is frequently used synonymously with wealth. When people say, “Joe is rich—he has an awful lot of money”, they probably mean that Joe not only has a lot of currency and a high balance in his checking account, but also has stocks, bonds, four cars, three houses, and a yacht. Thus, while ‘currency’ is too narrow a definition of money, this other popular usage is much too broad. Economists make a distinction between money in the form of currency, demand deposits, and other items that are used to make purchases, and wealth, the total collection of pieces of property that serve to store value. Wealth includes not only money but also other assets such as bonds, common stock, art, land, furniture, cars, and houses.

People also use the word money to describe what economists call income, as in the sentence “Sheila would be a wonderful catch; she has a good job and earns a lot of money”. Income is a flow of earnings per unit of time. Money, by contrast, is a stock: it is a certain amount at a given point in time. If someone tells you that he has an income of $1,000, you cannot tell whether he earns a lot or a little without knowing whether this $1,000 is earned per year, per month, or even per day. But if someone tells you that she has $1,000 in her pocket, you know exactly how much this is. Keep in mind that the money refers to anything that is generally accepted as payment for goods and services or in the repayment of debts, and is distinct from income and wealth.

Whether money is shells or rocks or gold or paper, it has three primary functions in any economy: as a medium of exchange, as a unit of account, and as a store of value. Of the three functions, its function as a medium of exchange is what distinguishes money from other assets such as stocks, bonds, and houses.

In almost all market transactions in our economy, money in the form of currency or checks is a medium of exchange; it is used to pay for goods and services. The use of money as a medium of exchange promotes economic efficiency by minimizing the time spent in exchanging goods and services. To see why, let’s look at a barter economy, one without money, in which goods and services are exchanged directly for other goods and services.

Take the case of Ellen the Economics Professor, who can do just one thing well: give brilliant economics lectures. In a barter economy, if Ellen wants to eat, she must find a farmer who not only produces the food she likes but also wants to learn economics. As you might expect, this search will be difficult and time-consuming, and Ellen might spend more time looking for such an economics-hungry farmer than she will teaching. It is even possible that she will have to quit lecturing and go into farming herself. Even so, she may still starve to death. The time spent trying to exchange goods or services is called a transaction cost. In a barter economy, transaction costs are high because people have to satisfy a “double coincidence of wants”—they have to find someone who has a good or service they want and who also wants the good or service they have to offer. Let’s see what happens if we introduce money into Ellen the Economics Professor’s world. Ellen can teach anyone who is willing to pay money to hear her lecture. She can then go to any farmer (or his representative at the supermarket) and buy the food she needs with the money she has been paid. The problem of the double coincidence of wants is avoided, and Ellen saves a lot of time, which she may spend doing what she does best: teaching.

As this example shows, money promotes economic efficiency by eliminating much of the time spent exchanging goods and services. It also promotes efficiency by allowing people to specialize in what they do best. Money is therefore essential in an economy: it is a lubricant that allows the economy to run more smoothly by lowering transaction costs, thereby encouraging specialization and division of labor. The need for money is so strong that almost every society beyond the most primitive invents it. For a commodity to function effectively as money, it has to meet several criteria:

1. It must be easily standardized, making it simple to ascertain its value;
2. It must be widely accepted;
3. It must be divisible, so that it is easy to ‘make change’;
4. It must be easy to carry;
5. It must not deteriorate quickly.

Objects that have satisfied these criteria have taken many unusual forms throughout human history, ranging from wampum (strings of beads) used by Native Americans, to tobacco and whiskey, used by the early American colonists, to cigarettes, used in prisoner-of-war camps during World War II. The diverse forms of money that have been developed over the years are as much a testament to the inventiveness of the human race as are the developments of tools and language.

The word ‘money’ can be used in many different ways, but it has a very specific meaning to economists. Economists define money as anything that is generally accepted as payment for goods or services or in the repayment of debts. Just saying that money is currency is not a good enough definition for economists. Economists make a distinction between money in the form of currency, demand deposits, and other items that are used to make purchases, and wealth the total collection of pieces of property that serve to store value. Income is a flow of earnings per unit of time. Money, by contrast, is a stock, it is a certain amount at a given point in time. “If someone tells you that he has an income of $1,000, you cannot tell whether he earns a lot or a little without knowing whether this $1,000 is earned per year, per month, or even per day. But if someone tells you that she has $1,000 in her pocket, you know exactly how much this is. Whether money is shells or rocks or gold or paper, it has three primary functions in any economy: as a medium of exchange, as a unit of account, and as a store of value. Of the three functions, its function as a medium of exchange is what distinguishes money from other assets such as stocks, bonds, and houses”.

Money used as a medium of exchange furthers economic efficiency by reducing the time spent in exchanging goods and services. It also helps efficiency by allowing people to concentrate on what they do best. “Money is therefore essential in an economy. It is a lubricant that allows the economy to run more smoothly by lowering transaction costs, thereby encouraging specialization and division of labor. The need for money is so strong that almost every society beyond the most primitive invents it”. For something to operate productively as money, it has to meet multiple benchmarks: “1) It must be easily standardized, making it simple to ascertain its value; 2) it must be widely accepted; 3) it must be divisible, so that it is easy to ‘make change’; 4) it must be easy to carry; and 5) it must not deteriorate quickly”. Objects that have fulfilled these benchmarks have taken many abnormal forms throughout human history, “ranging from wampum (strings of beads) used by Native Americans; to tobacco and whiskey, used by the early American colonists; to cigarettes, used in prisoner-of-war camps during World War II”. The various forms of money that have emerged over the years are as much a testament to the inventiveness of the human race as are the developments of tools and language.

The second role of money is to provide a unit of account, that is, money is used to measure worth in an economy. “Imagine how hard it would be in a barter economy to shop at a supermarket with 1,000 different items on its shelves and be faced with deciding whether chicken or fish is a better buy if the price of a pound of chicken were quoted as 4 pounds of butter and the price of a pound of fish as 8 pounds of tomatoes”. The answer to the problem is to present money into the economy and have all prices set in terms of units of that money. We can see that using money as a unit of account lowers transaction costs in an economy by reducing the number of prices that need to be considered. The benefits of this function of money grow as the economy becomes more complex.

Money also functions as a store of value; it is a repository of purchasing power available over time. A store of value is used to retain purchasing power from the time income is obtained until the time it is spent. This function of money is useful because most people do not want to spend their income right when they receive it, but would rather wait until they have the time or the want to shop. “Any asset—whether money, stocks, bonds, land, houses, art, or jewelry—can be used to store wealth. Many such assets have advantages over money as a store of value: They often pay the owner a higher interest rate than money, experience price appreciation, and deliver services such as providing a roof over one’s head”. What is the point of holding any money at all if assets are a more beneficial store of money? The answer to this question relates to the important economic concept of liquidity, which is the relative ease and speed with which an asset can be turned into a medium of exchange. Money is the most liquid asset of all because it is the medium of exchange. Other assets involve transaction costs when they are converted into money. How good a store of value money, is depends on the price level. “During times of inflation, when the price level is increasing rapidly, money loses value rapidly, and people become more unwilling to hold their wealth in this form. This is especially true during periods of extreme inflation, known as hyperinflation, in which the inflation rate exceeds 50% per month”.

We can obtain a better picture of the functions of money and the forms it has taken over time by looking at the evolution of the payments system, the method of conducting transactions in the economy. The payments system has been evolving over centuries, and with it the form of money. Precious metals were the primary means of payment and the main form of money at one point. Later, paper assets such as checks and currency became the main form of money to be used in the payments system. It helps to know how the payment system evolved to gain an understanding of where the system is heading. “For any object to function as money, it must be universally acceptable; everyone must be willing to take it in payment for goods and services. Money made up of precious metals or another valuable commodity is called commodity money, and from ancient times until several hundred years ago, commodity money functioned as the medium of exchange in all but the most primitive societies”. The biggest problem with a payments system based on precious metals is that such a form of money is very heavy and is hard to transport from one place to another. After precious metals, the next development in the payments system was paper currency. Paper currency has the advantage of being much lighter than coins or precious metal, but it can be accepted as a medium of exchange only if there is some trust in the authorities who issue it and if printing has reached a sufficiently advanced stage that counterfeiting is extremely difficult. Countries have the ability to change the currency they use whenever they want since currency has become a legal arrangement. “Major drawbacks of paper currency and coins are that they are easily stolen and can be expensive to transport in large amounts because of their bulk”. To stop this from happening, the next way the payment system evolved was by creating checks within the development of modern banking.

A check is an instruction from you to your bank to transfer money from your account to someone else’s account when he or she deposits the check. Checks allow transactions to take place without the need to carry around large amounts of currency. The introduction of checks was a major innovation that improved the efficiency of the payments system. The use of checks thus reduces the transportation costs associated with the payments system and improves economic efficiency. Another advantage of checks is that they can be written for any amount up to the balance in the account, making transactions for large amounts much easier. Checks are also advantageous in that loss from theft is greatly reduced and because they provide convenient receipts for purchases. There are two big problems that appear when you have a payments system based around checks. “First, it takes time to get checks from one place to another, a particularly serious problem if you are paying someone in a different location who needs to be paid quickly. If your need for cash is urgent, this feature of paying by check can be frustrating. Second, the paper shuffling required to process checks is costly”.

“The development of inexpensive computers and the spread of the Internet now make it cheap to pay bills electronically. Banks now provide websites at which you just log on, make a few clicks, and thereby transmit your payment electronically. Estimated cost savings when a bill is paid electronically rather than by a check exceed one dollar per transaction. Electronic payments technology can substitute not only for checks but also for cash, in the form of electronic money (or e-money)—money that exists only in electronic form. The first form of e-money was the debit card. Debit cards enable consumers to purchase goods and services by electronically transferring funds directly from their bank accounts to a merchant’s account. Most banks issue debit cards”.

Economists need an accurate definition that tells them which assets should be included to measure money. The problem of measuring money has recently become especially crucial because extensive financial innovation has produced new types of assets that might properly belong in a measure of money.