What is Money?

Money is a medium of exchange that facilitates trade and the transfer of goods and services. It serves several key functions in an economy:

1. Medium of Exchange: Money eliminates the inefficiencies of bartering by providing a common item that can be traded for goods and services.

2. Store of Value: Money can be saved and used in the future, retaining its value over time (though inflation can affect this).

3. Unit of Account: It provides a standard measure of value, making it easier to compare the value of goods and services.

4. Standard of Deferred Payment: It allows for the settlement of future obligations, such as debts or contracts.

Throughout history, money has taken various forms: physical (like coins and paper currency), commodity-based (like gold), and more recently, digital or electronic forms (like cryptocurrency).

At its core, money represents trust in a system, where individuals believe it can be used to trade for goods and services at any given time.