7 Most Commonly Misunderstood Types of Money

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Posted on December 6, 2011 by DigitalMoney

Digital money is a term used to describe a digital representation of value that can be digitally traded and functions as a medium of exchange, unit of account and/or store of value. This can include both digital representations of fiat currency or even Bitcoin which is an example of a purely digital currency.

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7 Most Commonly Misunderstood Types of Money

Posted on November 20, 2011 by DigitalMoney

Those who confuse money with wealth may often misunderstand the nature of money; however, there are at least seven types of money that are widely misunderstood. In this article I will explain each type and how it relates to wealth and its value in a monetary system. Fiat Money (Representative Money)

Fiat money is the most common form of legal tender in our modern world, but it is not widely understood due to the fact that it has no intrinsic value except as an object recognized by law as being acceptable in exchange for goods and services. The question then arises: what determines its value? The short answer is nothing and everything. The long answer is more complicated. Although it has no intrinsic value, fiat money has two important values: nominal

The 7 Most Commonly Misunderstood Types of Money

Money is a complex topic. If it was really simple, there would likely be no need for this blog. But in all seriousness, money is a broad topic, and there are many different types of money.

So lets get started…

1. Fiat Currency

2. Digital Fiat Currency

3. Narrow Bank Accounts

4. Bitcoin and Crypto Currencies

5. Peer-to-peer Lending Accounts

6. Precious Metals Investment Accounts

7. Stock Investment Accounts

It has been said, “Money makes the world go round.”

Money is the root of all evil.

The love of money is the root of all evil.

What are these and other sayings really trying to tell us? Money isn’t evil, it’s something we all need to survive in our modern society. But it is also a significant cause of some people’s problems because they don’t understand how money works.

The problem is that the vast majority of us have been trained to believe that there are only two types of money: cash and credit. This is not true. In fact, there are seven basic types of money and this article will help you understand them so that you can make better financial decisions.

There are many different types of money in our society today. There is cash, checks, credit cards and debit cards. There is also the digital money such as Paypal and other digital money transfer services.

For some, it is difficult to even identify all of these types of money but the truth is that there are many different kinds. The best way to understand all these different kinds is to understand how each one works. Here we will discuss the seven most common types of money in use today and how they work.

1. Cash (paper currency)

As defined above, paper currency is the first type of money that we will discuss. These are the bills and coins that you take with you when you go shopping or to the grocery store. They include everything from pennies and nickels to $10 and $20 bills. These are usually what people think of when they hear the word ‘money’.

2. Checks (an IOU)

A check is a written promise to pay another person a certain amount of either paper or digital currency at a later date. The person receiving the check can redeem it for cash at their bank or at another financial institution such as a supermarket or convenience store which offers check cashing services.

3. Credit Cards (

When we think of money, we usually think of dollar bills or coins. However, that’s not the only form of money that is used today. In fact, there are many different types of money in circulation around the world that you may or may not be aware of.

There are many different types of money and for the most part they all work very differently from one another. The type of currency used will depend on the country, its economic status and the people it is trading with at any given time.

The following are 7 different forms of money used around the world:

We’re all familiar with physical cash, and the electronic transactions we use every day. But what about all those other types of money that are circulating without your knowing?

One of the most important things to understand is that the money supply consists of more than just cash and checking deposits. It also includes savings deposits, money market mutual fund shares, traveler’s checks, and other highly liquid assets held by the public. The Federal Reserve refers to this broader measure of money as M2.

M1 includes all forms of currency (coins and paper money) in circulation and all demand deposits—the checking accounts banks offer individuals, companies, and government agencies; it also includes other checkable deposits called “negotiable order of withdrawal” (NOW) accounts. M1 does not include savings accounts or CDs. M2 adds the latter to M1 and is therefore a more inclusive measure of the money supply.

Since 2006, however, a number of alternative payment systems have gained wide acceptance such as PayPal, Bitcoin, Apple Pay and Venmo. Some experts believe these developments will reduce the demand for paper currency in circulation, which reached $1.5 trillion in 2013 – an increase of roughly $600 billion over 10 years earlier.

The U

First, we must define money. Money is not a coin or a note. This is incorrect. Money is a medium of exchange (a unit of account) that holds its value over time, and can be exchanged for goods and services.

Money is not a physical thing or an idea, it’s both.

Money has changed over time, from commodity money to fiat money, from paper notes to digital digits on screens and in databases.

Money is not something that you save for a rainy day (or is it?). Money today is not the same as money tomorrow, so spending it before it looses value appears to be prudent. For example, if you are sitting on $1000 dollars worth of cash today and inflation was 2% per annum for the next 12 months (a conservative estimate), then your $1000 dollars would only be worth $980 dollars at the end of the year; your net wealth position has reduced by 2%. If you spent $100 of your $1000 then you would still have $980 at the end of the year but your net wealth position would still be positive at $880 dollars (assuming that you didn’t spend anymore).

It may seem counter intuitive but spending can be good! If you don’t spend this devalues over time

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