Fiat Money VS Cryptocurrency

The invention of the blockchain has given rise to a new species of currency, that of crypto currency. Existing innovations in the cryptocurrency space foreshadow the potential that currencies could be designed as such to not only act as currencies but represent other forms of value as well.

Decentralized, which implies a trust-less and distributed network, made possible through blockchain-based technology.

Image source: https://www.coindesk.com/origins-money-darwin-evolution-cryptocurrency/

Why do people call it currency?

A currency, as defined, refers to money in any form when in actual use or circulation as a medium of exchange, especially circulating banknotes and coins.

Let’s illustrate it in an oversimplified story.

One day, a lady came to a town where everybody seems to be living on debt.

She stopped by a motel, put down a $1,000 notes on the reception table as the deposit, and said that she’d like to check out the rooms upstairs.

As the lady walked upstairs, the motel owner grabbed the $1,000 notes, ran to the butcher next door and settled his bill.

With that $1,000 notes, the butcher ran to the farmer who lived opposite the river and paid his debt.

The farmer cleared his $1,000 debt to his supplier with the money he just received from the butcher.

The supplier quickly settled his bill with the masseur for last night’s services.

With this $1,000, the masseur paid the room rental to the motel owner.

As the lady walked down the stairs, the $1,000 is already back on the reception table.

The lady took back the $1,000 notes and left the motel as she couldn’t find the room she likes.

While it seems that nobody produced anything, and nobody gained anything on that day, all the debt was cleared!

This is money at work.

Money is only as useful as it should be when it is being circulated.