Many people think that money is bad. They don’t want nothing to do with it. Let me explain why and how these individuals have the wrong picture on money. Let me start with a short story to illustrate the difficulties we would face if we did not have a currency.

A Society with a currency
I am a fisherman and on my last fishing trip my net broke down without my net, I can’t catch fish reliably. A new net costs $100. I need to make some money, with my fish. The farmer’s market is in two days. I will sell my fish there. After a few hours of exchanging the fish for money, I successfully sold all my fish and made enough money to buy the net. I can now easily walk in to the store and by myself a new net.

A Society without a currency
Like in the world with a currency, my net broke down. In the shop, the salesperson lets me know, that we won’t take fish for the net. That is a big problem for me, as the only thing of value that I have, is my fish. He says he still needs new shoes. After asking a few people, I found a person that has that Item. But sadly he informs me that he does not like fish, and won’t give me the shoes for fish. Sadly, I can not buy a new net, as no one wants to trade me shoes for my fish.

You have seen what troubles that would amount, if we would not have a currency. Let us now investigate the true nature of money. Let us define what money is. Money is a system of value that facilitates the exchange of goods. The use of money eliminates the necessity for both parties to have something that the other desires or needs. We now know what money is, let’s make is useful. In order to be most useful, money should be fungible, durable, portable, recognizable, and stable. These properties reduce the transaction cost of using money by making it easy to exchange.