Money and Currency: The Differences

Money being a social tool that serves as a medium of exchange and same purpose being served by currency, we often use the terms interchangeably which shouldn’t be the case. Here goes the “why” behind it.

Before getting into differences let’s first understand what money is, according to what Wikipedia says, Money is any item or verifiable record that serves four functions : 1.medium of exchange 2.unit of account 3.store of value 4.standard of deferred payment. So, money is not necessarily any physical item or something which must have intrinsic value though it could be any of them. Now, what currency is, Currency is just a subset of money referring to money in any form when in actual circulation or use as medium of exchange.

Money can have intrinsic value, “store of value” like gold and silver while currency once had intrinsic value but since 1970s FIAT currencies took over and currency lost its intrinsic value. So currency being something issued by government is more convenient medium of exchange such that instead of toting around bars of silver and gold we have more convenient ways to make payment, and ofcourse your Paytm balance and account balance is not currency but a form of money.

We generally say deposit money in bank account though one can deposit currency too and one might carry a check too, says it all.

So, next time when you use the words, be careful :)

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