Since ancient times, a medium of exchange was used for trading. People used to exchange their goods or services for the money and later on they used the money to purchase goods and services. In this manner, they had a good amount of control over the transactions. However, during these times, the money was not printed as per the requirement of the country.
From a monetary point of view, currency is a medium of exchange that is created by the government and it is legal tender in all parts of the country. It can be further divided into two categories; gold and silver.
Gold is the form of currency that was in use for more than 5,000 years and it is considered as the purest form of money. In this, there are no metals or other materials in it.
|The value of money is defined by its metal content
|The value of currency is not defined by any specific metal content
|The standard of money is defined by the government of a country
|The standard of currency is not defined by any specific government, it can be defined as legal tender in any part of the world
|Money is a unit in value
|Currency is a unit in the accounting
Silver is the most commonly used form of currency in present times. It has been made from the alloys of silver, copper and other materials and this makes it less costly than gold. In this, the price of money depends on its quality and its scarcity.
These days, the money that is used for the transactions is fiat and digital money. However, fiat money is also used for trading and it can be easily converted into gold or silver. In this, the money is printed by the government and it is legal tender in all parts of the country.
The digital money, on the other hand, has a virtual value and it can be easily converted into fiat money. However, its security is very low and this makes it not good for transactions.
You know that we use a currency for our transactions and it is legal tender in all parts of the country. You also know that the money that is used for the transactions is the fiat and digital money. However, you might think that money and currency are the same.
The terms money and currency are often used interchangeably and they are different from each other. But what is the difference between money and currency? Why is it used interchangeably? In this article, we will answer all these questions. We will also know the differences between money and currency, the origin of the word and the characteristics that differentiate them. You will also know the differences between fiat and digital money. Let’s get started.
What is money?
Money is the medium of exchange and the unit of account for a given economy. Money is created by governments and other authorities in order to meet the demand for currency. Before the emergence of money, people were forced to barter for goods and services. Money is used to facilitate the exchange of goods and services.
Money comes in various forms such as gold, silver, paper, coins and electronic money. The value of money is determined by the supply and demand of money. Money is a debt-free asset that has intrinsic value.
What is currency?
Currency is a medium of exchange which has a unit of account. Currency can be physical or electronic in nature. Currency can be used to purchase goods and services in exchange for goods and services, hence, it is also called a medium of exchange. Currency can be made of gold, silver, precious metals, paper, and electronic forms.
Currency is used to pay taxes and fees in the society. It is also used to pay utility bills such as rent, electricity and water bills. Currency is also used for the payment of fines in courts. One form of money can have different forms of currency. This means that a country can have different currencies depending on the type of goods and services that are being traded. A country may have more than one currency. For example, the United States has the dollar as its currency, but it also has the Euro as its currency.
What are the similarities between money and currency?
- They are both considered as important aspects of our life.
- They are both used for trading.
- Both of them are basically required for running our life and paying our bills.
- Both of them are legal tender.
- They both have value in our society and can be exchanged for goods and services.
- They both represent a certain amount of value.
What are the differences between money and currency?
As per the definition, money is a tangible thing, while currency is an intangible thing. There are a number of differences between money and currency, such as:
- The terms and value
Money is also called as cash, while currency is also called as notes or coin. The value of money is defined by its metal content, while the value of currency is not defined by any specific metal content.
- The standard of money
The standard of money is defined by the government of a country, while the standard of currency is not defined by any specific government. In other words, currency can be defined as legal tender in any part of the world.
Money is a unit in value, while currency is a unit in the accounting. For example, a dollar is the value of money, while a dollar bill is the unit of currency.
The cash is a physical thing, while the currency is an intangible thing. For example, if you have a dollar in your pocket, it is money. But if you have $100 in your bank account, it is currency.