Table of Contents

What is perfect money ?

Different places have experimented with different forms of money in the past. Some money systems were more successful than others and lasted longer. However, humans have not found a perfect form of money till now in their millions of years of existence.

Perfect money will have all the following characteristics:

  • Medium of exchange: Ideal money is widely accepted as mode of payment.
  • Portability: It is easy to carry money from 1 place to another.
  • Store of value: I do not need to spend my money rightaway. I should be able store my money awithout it loosing its value so that I can spend it later.
  • Unit of account: Money should have divisible and recombinable units so that all shops can denominate their goods in units of money.
  • Recognisablity: People should be able to identify real from fake money easily.
  • Fungibility: Units of money should be identical and indistinguishable from one another. This also preserves privacy of people transacting.
  • Scarcity: Humans have unlimited desires. Hence they will try to accumulate as much commodity that is being used as money as possible. Supply of ideal money must be difficult to increase even when it is universally desired.
  • Censorship resistance: Third party party should not be able to stop a voluntary transaction between two individuals.
  • Cannot be confiscated: Ideal money is difficult to steal and confiscate by force.