What is money or cash?
A philosophical view
We all know (at least these days) money as cash as legal tender (notes and coins) or as bank balances, credit limit on a card, digital currency (that is equivalent of money) or anything that stores value.
Typically money is liquid and fungible (1000 in your wallet is the same as the 1000 in my wallet, even if they are different serial number notes)
so how does one receive or pay money, in any form?
Cash – we hand over or receive the notes
Cheque – we instruct our bank to pay someone else or deposit a cheque drawn on us
Bank transfer – we authorize the bank to make a transfer
Credit cards – we are authorized by the issuer and hence entitled to pay for a purchase as we have been given authority up to a certain limit
The key point is money is nothing but the power of instruction over a store of value and is used to convert one store of value by using that instruction to purchase another store of value such as an asset (gold, property, stock, bonds, art, vehicles, etc.)
That is the key – money gives one the power to instruct. Cash notes are nothing but bearer cheques with the instruction provided by the central bank (e.g. RBI, Fed Reserve, Treasury, etc.)
Keeping this concept in mind, we can understand any currency, digital or bank based.
The power to instruct comes from a bank (or the central bank), the wallet or the credit card issuer.
So all of us work to get more power to instruct !! 🙂