What is Money?
Riddle: People make me, save me, change me, raise me. What am I?
Now, what is Money?
According to Investopedia,
According to Merriam Webster,
You see in both the definitions the phrase a medium of exchange is used to define what Money is.
Therefore, Money is a recognized medium of exchange between two parties in a transaction.
A little dive into the History lesson,
Therefore anything can be a form of money as long as the individuals involved in the transaction agree to be compensated with it.
We needed this medium of exchange because we had to store the energy expenditure of human labor, i.e TIME. No one wants their labor to be stored in a loaf of bread, to later realize a piece of it was eaten by a rat.
Therefore, money transformed into stable objects like metals. Gold, Silver, and copper have been the oldest forms of money for us. But the weight and the shackling sounds made it inconvenient to carry and keep secure. Therefore a new form of money was introduced Paper Money.
Therefore Paper money is created by a central authority such as a government. Fiat money is not backed by any commodity but a promise by the government.
Now, as you can see with the introduction of Bitcoin in 2008, different forms of cryptocurrency have been introduced which is more than 10,000 types of an alternative coin in the digital space.
Furthermore, Non-Fungible Token(NFT) has taken over the market claiming to represent value.
Robert Kiyosaki puts it in simple terms, “There are three types of Money, God’s money, Government's money, and People’s money.”
So let's ask ourselves a question, “What really is Money?”