Money is one of the vital tools in society; this invention helped to develop trade and exchange. Many people refer to money as a physical entity; indeed, in economics, money plays a significant role in electronic exchange. Money has several functions; for example, it serves as a medium of exchange, a store of value, and a unit of account. It is vital to examine each of these aspects and look at the feasibility of money stably completing these functions in the near future.
It is essential to state the definition of money in narrow and wide senses. People understand them as coins and banknotes, but it represents non-cash money, deposits, and obligations in economics. In other words, it is a financial asset used in exchange for goods and services. It serves as a unit of account and a specific measure, which helps evaluate the product’s cost to another facility. People understand whether the product is cheaper or more costly due to this function of money.
The second aspect is money being a medium of exchange when the product is exchanged for a certain amount of cash. In this case, money is a mediator in the trading process; the person needs physical or virtual money to complete this operation. Moreover, money should be legal and recognized by the government where the trade takes place. It is possible to state that money is a standard unit in which the cost of products is established.
Money function as a store of value; the main difference is that, in this case, money is not in active exchange. This money does not participate in turnover; moreover, money can bring profit or loss depending on the type of savings – economic situation and method of saving influence money behavior in this period. There are several forms of financial savings: cash, non-cash, deposit, and obligations. The first method is the most conventional; it does not bring income, while non-cash savings carry certain dividends. Deposits and obligations are investments; the person receives money if the company’s stakes increase. In other words, investors own a part of the company, which pays them dividends from profit.
It is crucial to determine whether the money will fulfill all functions safely in the nearest future. Nowadays, many types of cash appear – for example, cryptocurrencies. Many people start buying such forms of currency as it shows ambitions in the modern market. There is an opinion that society will become cashless in the future; people will use electronic money (Fabris, 2019). Indeed, it is happening in the contemporary community: people use non-cash methods such as Google Pay or Apple Pay to purchase goods and services. Moreover, some refuse to save physical cash and prefer to become investors.
Overall, it is feasible to mention that money will comply with most functions in the nearest future. For example, it will serve as a medium of exchange but with an inclination toward non-physical currency. Furthermore, it will remain the unit of measure, as people will continuously measure and evaluate the cost of certain goods compared to other market units. Accordingly, people will save money, but now there is a tendency to make it virtually, in deposits or obligations. The economic situation and the condition within the company influence the income of the investor, and it is necessary to make the right choices while using money as a store of value. Therefore, money will exist, with some modifications of newly-appeared currencies and innovative methods of money exchange.
Reference
Fabris, N. (2019). Cashless society – the future of money or a utopia? Journal of Central Banking Theory and Practice, 8(1), 53–66.