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Simplify: Money

Simplify: Money

As you know, everyone wants to make a lot of money, It’s like a measure of strength. So what is money and why is it so important? Let’s find out with this article

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Nature of money

It can be understood simply that money is an intermediary to conduct the exchange of goods. It is created and recognized by a certain government and people in that country can use it as a legal currency for buying and selling.

The biggest use of money is to make the exchange process as easy and convenient as possible

A brief history of money

  • The exchange of goods has existed for a very long time, they use the products they create to exchange for the products of others to satisfy the purposes of both.
    • Ex: A has apples, B has cows. When A wants to buy cows, A will bring apples to B in exchange for cows - 100 apples for 1 cow
    • So what is the problem? Apples can easily be damage and what if B doesn’t like apples
    • Hence, If A want to buy cows, he need to ensure his apple not damage and he need to find someone has cows and also need apple. It quite hard to do that.
  • That’s why currency was born, it is like a medium that is accepted by everyone in that ecosystem to use.
  • Going through many stages of development such as feathers, coins, bullion, paper money, and most likely future is cryptocurrency.

Inflationary

Have you ever wondered why the government doesn’t print a lot of money so that everyone can spend it comfortably? Everyone can become rich?

That’s because the amount of money a country has represents the value of the goods it has. If too much money is printed, it will lead to inflation causing the value of that currency to decrease.

Ex: Country A has 10 apples they make 10 coins it means the price of 1 apple is 1 coin. If the country still has 10 apples but they print 20 coins, the price of one apple will be 2 coins.

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Not only in USA, I believe every nation experience this each year. That’s why people tend to store assets like stocks, government bonds, real estate and recently it’s crypto.

Potential dangers from natural disasters and war

If you live in a place where there are no natural disasters or wars, congratulations! But if unfortunately you are living in such areas, it will be very difficult for you to store the value of your property.

An earthquake or flood can wash away your entire home. A war can affect the entire currency system of that country.

Hence, they need an asset that is borderless, portable, secure, impervious to tampering, and recognized by many other countries.

Why is cryptocurrency?

Crypto currency has many outstanding features such as:

  • Scarcity
  • Easily broken down to small units
  • Easy audit
  • Move easily
  • Weightlessness
  • Borderless and completely decentralized
  • Can’t be faked
  • No one has been able to hack or hack Bitcoin’s network yet
  • Smarter and growing steadily with updates

Conclusion

Hopefully through this article you can understand the nature of money, its use and development. Continue to follow the next articles to understand more about the financial market and the potential of the crypto market.

Thanks

Solareum team