On average, everyone must know the basic requirements for money in order to be accepted by society in general. And the terms of money have been agreed upon and based on the fulfillment of several aspects. Because money is a legal tender if it has been recognized and determined by a country and of course also recognized by other countries in the world.
The problem of money as a medium of exchange that is generally accepted in a society must meet the requirements and types of money that have been determined or created. Various forms of money have been created and used by the world community. In the form of any object that has been agreed upon in the process of exchanging goods and services.
In this case, if you look at the conditions that have been agreed as a condition for money that must be met, these are:
Generally accepted, it is not easily damaged, has value in the long term, is easy to carry and store, can be shared, has one quality, and the last one is limited or limited.
Then how to see crypto in fulfilling the requirements to become money that is recognized by the community. Here's a little view on the fulfillment of the terms of money.
1. Generally Accepted (Acceptability)
The condition for money is that it must be generally accepted by the wider community. When viewed at this time, of course, crypto has entered the fulfillment of this requirement. Where now many people have accepted the existence of crypto as a currency that can be used.
Even in cryptocurrencies, various communities have been created that will usually set a payment instrument that has been agreed upon and guaranteed in its use. In this case, the prevailing currency still requires determination by the state and guaranteed by the government of a country.
2. The Terms of Money are Durable and Not Easily Damaged (Durability)
Currency used to have many different models. And in its metallic capacity, it is undeniable that metal has enough durable strength to meet the requirements of currency. For crypto it can be seen that there is no form in reality. However, the existence of the current era of the word crypto technology can be said to be in digital or virtual form.
As the times progressed, crypto coins were considered unable to meet the need for money production because the word virtual was or was out of shape, but on the other hand, seeing the conditions of the all-digital era, now digital can be said to be in the form category and with the system used it is even better if it is said in terms of durable or indestructible. There will be no obsolete word for crypto word form.
3. Have Value
Money as a medium of exchange that has been determined and has been guaranteed by the government will have value with relatively constant and stable conditions. But in fact, at one time there were many problems that resulted in the exchange rate dropping drastically, such as inflation, the country's economy, international trade and war.
In this case, crypto already has a value that tends to be better than fiat or commonly used currencies. However, it is still an obstacle only in terms of the volatility value.
4. Terms of Money Easy to Carry and Store (Portability)
If for this one. Of course, crypto is the type of money that can be said to be easy to carry and store. In fact, the advantages are more practical and relatively safe.
5. Easily Divided Without Losing Value (divisibility)
This is a better fulfillment condition than the division word problem. In its digitized form, cryptocurrencies are much easier to share than paper money or coins. Because the form is digital compared to the form commonly used. Imagine being able to divide banknotes in units of various types of digits. Of course, it is difficult because paper and metal are only made up of a number of nominals.
6. Have Only One Quality (Uniformity)
One quality problem if the coin is said to be the smallest form. So crypto has less quality than existing money. For example Btc with its satoshi units.
7. The Amount is Relatively Limited and Not Easily Counterfeited (Scarcity)
This problem is the most important and the main reason for me. Because to keep the exchange rate of the currency in effect is to maintain the quantity or amount of money circulating in the community. This does not mean that the number of circulation is limited, but rather in terms of adjusting to the needs and ease of buying and selling transactions of the community.
With a limited existence, it can indeed be used as a limitation for circulation and even distribution in the end. Not just a value that is increasing or expensive. However, looking at the scarcity factor, it will be easy to see that there is an accumulation of one organization or individual so that an even attitude can be applied in this regard.
And the problem that is common and often discussed from the past until now is the problem of counterfeiting. Crypto cannot be counterfeited like existing fiat money. So that in the fulfillment of crypto that has a requirement for money, the crypto has fulfilled all the requirements as money.
Posted Using LeoFinance Beta
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