Difference between Money and Currency
Key Difference: Money is an intangible asset, which means it cannot be touched, it cannot be smelled; however it can be seen in terms of numbers. Money does have a few properties such as it must be a medium of exchange; a unit of account; a store of value; and, occasionally in the past, a standard of deferred payment. Currency is a tangible concept that is based on the intangible money. Currency is the promissory note or coin that is presented in form of money. Currency is what brings money to life.
Money and currency are two words that are used every day and are often confused as being the same thing. They are used interchangeably in many scenarios. There are many different articles that suggest how money and currency are completely different from each other. However, many articles state that there is such as thing is as good money and bad money. Good money is considered to be gold, while bad money is considered to be currency. This if often confusing for beginners. Let’s get back to the basics.
Money is an intangible concept, which means it cannot be touched, it cannot be smelled; however it can be seen in terms of numbers. These days everything runs online, so if you transfer money from one account to another account, the only difference is in the numbers. You don’t actually see the tangible money or you cannot physically touch the money. That’s what money is! It is a concept that is used to describe a medium to exchange commodities. Originally, we used to have a barter system which would require trading one commodity for another. However, in today’s fast paced world, not everyone works or deals in commodities. Also, it would become a very time consuming job having to barter for every single thing. Hence, money makes it easier to trade one commodity against money, which can then be traded for another commodity or service.
Money does have a few properties such as it must be a medium of exchange; a unit of account; a store of value; and, occasionally in the past, a standard of deferred payment. Any kind of object that fulfills these functions can be considered as money. Although, previously gold was considered to be money as the banks would have gold reserved, based on which they would issue notes or currencies. These were basically promissory notes stating that it would pay you that amount of gold when presented with the currency. However, this has long since changed and one can no longer demand gold/silver or any such commodity upon presenting the cash. Money has now become a complete intangible concept that is represented by numbers in the system.
Currency is a tangible concept that is based on the intangible money. Currency is the promissory note or coin that is presented in form of money. Currency is what brings money to life. It is what is traded in return of goods or services. The term ‘currency’ is derived from the Middle English word ‘curraunt’, meaning “in circulation”. These are the coins and bank notes that are in circulation. Each country has its own currency, which can be traded against another currency. Throughout history, various different things have been used as currency including silver, shells and even stores of grains. This describes any medium that can be used to purchase another commodity.
Money and currency are often used interchangeably in today’s world because of their similar concepts. However, they are not exactly the same. Money will be an intangible concept, while currency is what brings money to life. The bank notes and the coins that are held are considered as currency, while money is basically numbers.
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