What is money?

What is money?

Money isn't just pieces of paper. It can be anything that is capable of being used as a medium of exchange, unit of account or store of value. There is a good reason for money. A market without money is called a barter market. there is a slight problem with money, it's called inflation. Because of inflation the value of paper and coins goes down every year. It seems like it would be a lot less trouble to trade item for item, rather than adding the time it takes to give get and receive money (paper). There is one very large problem with barter that is the soul reason for using money. This problem is called the, "double coincidence of wants" problem. Suppose, for a moment, that I have a bike and I would like to exchange it for an iPod. In order to do this I'd have to find a person, or combination of people that are looking for a bike and have an iPod. But in such a large country this would take a very long time to do, rather than using money. Paper money doesn't actually have any real value, it's just a piece of paper. "Why do we use it then?", you might ask. I would personally use the term, "hypothetic value," to describe money. My reason is because the value of money only comes from the people who want it. This is unlike older forms of money, when the money value actually came from the cost of the metal it took to make that one piece of money. I in the U.S. it isn't likely that money will be replaced in the near future, but it very well may change form.