In the News
Digital currencies see a new price boom
24th May 2017
This article from BBC news underscores the fact that we're in the middle of a digital currency boom, with Bitcoin and Ethereum traded at record highs.
Reading the piece might prompt you to think about the main characteristics of money, as well as the four key functions of money. to what extent do digital currencies fulfil these functions, and what is stopping them from being more widely traded.
Money is defined best by what money does. Money – in its various forms – fulfils various key functions including a medium of exchange, a unit of account, a store of value and a standard of deferred payment.
Background on Bit Coin
Bitcoin is a digital currency that was launched by a secretive entrepreneur in October 2008, with the aim of being “a new electronic cash system that is fully peer-to-peer with no trusted third party”. Bitcoins are created by users (a.k.a. “miners”) who allow the Bitcoin system to use their computing power to process Bitcoin transactions. These miners are also rewarded with the some of the transaction fees paid by those who use Bitcoin. A few retailers, especially online, accept Bitcoin, partly because the transaction fees are lower than those of credit cards. However, Bitcoin’s value has been volatile. (Source: tutor2u economics glossary, 2017)
You might also like
Monetary Policy - Managing Demand
Study Notes
What is Money
21st September 2015
The Future of Cash
29th September 2015
Can a new currency help Somalia
9th February 2016
Money in the modern economy
29th February 2016
Zimbabwe's Nine Legal Tender Currencies
6th March 2016
Fantasy Economics for AS and A2 students!
14th April 2016
A History of Money in Five Objects
22nd April 2016