This video and the next is, as the title suggests, about Cash and Digital Currency etc.
I dare say that the greatest part of these videos should be fairly obvious, but I thought I’d do a couple of videos on the topics all the same … just in case. There might be a few bits of information that are new to some people listening. And, I will also, of course, be giving my views on these matters as we proceed.
So, let’s get underway …
Cash and Digital Currency
Cash refers to the physical form of currency, the paper currency and metal coins in circulation – the ones we use every day in stores and such like. So, this includes all the banknotes and all the coins of whatever denomination.
“Paper currency” isn’t a new phenomenon. Banknotes, or Promissory notes - have been around an awfully long time. According to Wikipedia, they were “first developed during the Tang and Song dynasties, in China starting in the 7th Century”. They were introduced to Europe during the 13th Century But, the 17th Century is time period when paper currency began to really become predominant in Europe – more’s the pity. I would take tea, silks and all manner of other products as exports from China over banknotes anytime.
Banknotes are sometimes called “paper money”, but this is incorrect. They should be called “paper currency”. There is a very big difference between money and currency. Most people use the terms “money” and “currency” more or less interchangeably, but technically they are different, and so, shouldn’t really be confused. Perhaps you might think I’m being pedantic, but, in my opinion, it’s important to use terms correctly – especially in this instance. I guarantee that when most people on the planet understand the difference between money and currency, we will live in a far, far better world. I eagerly wait for that time to come.
Precious metals like gold and silver are generally considered as being money, real money. In days gone by, gold and silver were used as a medium of exchange in commerce, or trade. Indeed, they have been used as money for the millennia.
However, it’s not always convenient, or safe to carry around amounts of gold and silver. Banknotes go some way towards solving this issue – at least in terms of their bulk. Needless to say perhaps, but banknotes weigh a lot less than precious metals. So in terms of portability, they have that advantage over gold, or silver.
The upshot is that banknotes have been used medium of exchange in commerce, or trade in place of gold and silver. Be that as it may, there is one very important caveat when considering paper currencies. They must be redeemable. Redeemability means the ability to convert paper currency to specie. What does this mean in layman’s terms?
Put in simple, everyday terms … this means that someone in possession of a banknote should be able to go into a bank and exchange the banknote, getting whatever amount of gold is denoted by the sum on the banknote in return.
