Currency

What is Currency?

Currency is money used in economic transactions. Essential properties include medium of exchange, unit of account, portability, durability, divisibility, fungibility, and scarcity.

Key Properties of Currency

  1. Medium of Exchange: Used in buying and selling.
  2. Unit of Account: Measures economic value.
  3. Portability: Convenient to carry and use.
  4. Durability: Can be used repeatedly over time.
  5. Divisibility: Can be divided into smaller units for transactions.
  6. Fungibility: Each unit is identical and interchangeable.
  7. Scarcity: Limited in supply to maintain and preserve value.

Fiat Currency

is government-issued money not backed by a physical commodity. Its value is based on trust in the issuer. Examples include the US Dollar and Euro.

Cryptocurrency

is digital or virtual currency secured by cryptography on a decentralized network. Examples are Bitcoin and Ethereum. It’s characterized by a decentralized control and often a capped supply, ensuring scarcity.

NFTs as Currency

Non-Fungible Tokens (NFTs) represent unique digital assets. They are not identical and each NFT can have a different value. While some NFTs can be divisible, they differ from standard currency in their uniqueness and are not interchangeable.