Today we will be focusing on money and cryptocurrency outlining the importance, what makes it a good medium of exchange, what drives the store of value and so on..
Let take a ride as, we start with what is a medium of exchange?
A more efficient way to exchange products and services than the barter system, money serves the intermediary between the products or services that people want to trade.
what makes a good medium of exchange?
*Durability
*Transportability
*Divisibility
*Non-counterfeitability
*Fungility
Store of Value
what is a store of value?
A store of value is a mechanism by which wealth can be saved and retrieved in the future with some predictability about its future value.
*store of value is not a function solely of currencies, but of assets in general.
Notables Stores of Value:
*Gold/Silver/Diamond
*Reserve currencies and/ or the bonds of reserve currency nations.
*Stocks/ bonds/Real Estate.
Bitcoin/virtual currencies, as unstable as they may seem, are the kind of money that works in an unstable world that we all know of, it is a good store of value, unit of account, and medium of exchange, to the extent that these terms make sense amid great uncertainity.
what is Cryptocurrency and how does it work?
A Cryptocurrency is a digital currency that uses encryption (cryptography) to generate digital tokens or money and to verify transactions. Transactions are added to a public ledger also called a Transaction Block Chain and new coins are created through a process known as mining. its an encrypted decentralized digital currency transferred between peers an confirmed in a public ledger via a process known as mining. Most cryptocurrencies are decentralized, and open sourced, meaning that their source codes are available publicly. The monetary system of the currency are also embedded in the code and are beyond the control of any one individual or organization.
To be continued in our next articles.
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