Some thoughts from yesterday that I think can be expanded upon
[quote=“fractals, post:33, topic:3463”][quote=“levent, post:32, topic:3463”]What determines the value of money?
We need to discuss this situation
money What is not clear is?[/quote]
Money is inextricably linked to every person on this planet, yet rarely does a person ponder how money came to its current state. The populace spends the majority of their time working a job, with the motive to make money. With few people focusing on the importance of money itself, we are left with the current monetary paradigm, one in which money is controlled by nation states and central banks.
The three functions of money are unit of account, medium of exchange, and store of value.
The unit of account has characteristics of being divisible into smaller units and being fungible. This is accomplished with different denominations of notes, and standard currencies that do not differ. Medium of exchange solves the problem of coincidences of wants that the barter system could not solve. Store of value permits that money must not lose considerable value over longer periods of time.
Fiat currencies are able to accomplish all of this effectively, however the store of value has come over threat with the issuers of money inflating the money supply at considerable rates. Even with moderate inflation levels in the United States the depreciation of the value is considerable over longer time frames. This threatens the store of value of money and may lead into problems such as hyperinflation.
Peercoin accomplishes unit of account and medium of exchange well, but struggles with store of value. If we look at the price of Peercoin now it is not a good store of value from where it was a year prior. I remember the Peercoin community advertising Peercoin as a store of value. I can see Peercoin accomplishing store of value through a low inflation rate that is not susceptible to the whims of governmental entities.
Ultimately money relies on perception, the Peseta was once valuable and now worthless as Spain transitioned into the Euro. What was once perceived as valuable is now worthless. Money relies on perception of value.[/quote]