First of all each macroeconomics course defines money and describes the functions, types, and characteristics of money. The use of funds results in a more efficient distribution of resources and eliminates barter and synchronization of requirements. Almost all societies understood this. Furthermore the chance to find someone who has something you want, at the same time who needs something you own, is something that takes a long time. In addition Money solves this problem.
So in this article, we will discuss a different type of money, its impact and its impact on traditional money. Bitcoin vs. Economy 101
Bitcoin vs. Economy 101
How do economists know money?
All economics books begin with the three functions of money. Means of exchange, Store value, The unit of account.
- The function of these jobs is exchange. Where sellers accept money for goods and services. As mentioned above, societies must trade in the absence of money.
- Money is also a store of value. If you sell something or provide a service, you’ll want to save your purchasing power later. Inflation or devaluation weakens money as a living stock of value.
- This is also the money unit for the account. Where money must be able to provide a measure of the valuation of goods and services. It is basically a measure of the price comparison of goods and services and provides a measurable signal in a continuous adjustment of resource allocation.
Anything that provides these jobs will be a good money. Whether it is absolutely rectangular of cotton paper, figures on a computer or anything that works as money, it is money.
Types of money
The Econ 101 also specifies different types of money. With a focus usually on three types: Commodity money, representative money, and Fiat money.
- Commodity money is money that also has value as a commodity. Such as cattle, cigarettes and precious stones, for example.
- Representative money is money that is subsidized, or replaceable, with objects of value such as gold or silver. Such as Tether, which is supported by the US dollar.
- Fiat money is money that is created by the government or the system. Governments usually make this kind of money the only way to pay taxes. Obviously, this gives him an important benefit and makes us accept this system, which seems absurd.
Finally, economists have identified some characteristics that make money good: durability, mobility, stability in value, scarcity, acceptance.
Let us make a simple assessment and test the Pitcullin. We can consider a scale of 30 points with 10 points for each category: functions, species, and characteristics.
- Many people do not accept Bitcoin as a means of exchange. Recent headlines have indicated that some large-name companies have stopped accepting them. Further research will be needed to determine the rate of change in global acceptance. However, it should not be overlooked that they are now easily converted into mandatory funds. Essentially, one can use a homeowner anywhere where the Visa logo is accepted, by debit cards that convert Bitcoin to a mandatory currency at the point of sale. This is not true in all countries.
- In terms of value storage, KFH is still very volatile. If you bought Bitcoin after its price hike of $ 19,000, it was a terrible store for value. If you bought your home before 2017, it was one of the greatest value stores on the rake. But overall, extreme volatility is not a good trait when we aim to provide this function.
- Bitcoin was not an important unit of calculation, but it can be said that it develops into a type of account unit to measure and buy other encoded currencies. Certainly, some people have just completed a transaction using a bitcoin as a barometer. But the number of such transactions is still relatively small.
Result: 6 out of 10 for money jobs.
Bitcoin is very portable, fully divisible, solid and scary. It is an ideal coin from these aspects. But it lacks stability and acceptance.
Result: 8 out of 10 properties
Money types represent what money was in the past. Basically most of the money was either commodity money, representative or mandatory. KFH is not a commodity, it does not represent anything of value and certainly not mandatory. All that makes the Betquin mining system honest is to represent every computer, energy and manpower in the mining system. Since it is new, there is no precedent for this form of money. Encrypted currency is a new type of money, and certainly textbooks will be included in the future. But so far, they do not count in any kind of money as Econ 101.
Result: 4 out of 10 for species
Average score of Bitcoin
According to this assessment, Bitcoin received a score of 18 out of 30, equivalent to 60%. Today’s value is the collective analysis of all participants in the Bitcoin market. One reason why it has not yet reached 50,000 is because it is unstable and lacks widespread acceptance. If KFH becomes more stable and more acceptable, it can meet better standards than the ones we mentioned. KFH needs to improve stability and accept markets. This is likely to happen. There are also other coded currencies, trying to do it better, and many governments are actively trying to disrupt the acceptance function. The follow-up will be interesting.