Economic value: benefit provided by a product or service. It is subjective.
The tool used to (1) represent and (2) store economic value that makes possible its (2) transfer, (3) exchange and (4) measurement is called money.
It allows for social coordination.
Historically, money has evolved as stages that coincide with its functions:
Social representation of value: it displays easily verifiable economic value that enables its recognition.
2nd. Store of Value. Medium of Wealth Transfer.
Preservation of economic value/Transportation of economic value across time.
3rd. Medium of Exchange.
Transportation of economic value across space (between people/merchants).
4th. Standard of Value.
Unit of account: it measures economic value. This implies the existence of a price system that facilitates economic (value) calculation.
Monetary properties provide security to fulfill these functions:
1. - unforgeable costliness: security against misrepresentation. The costliness in its creation implies scarcity which represents value. Its unforgeability implies recognizability/distinguishability (the ability to be easily verified).
2. Unforgeable costliness and:
- predictable low inflation: security against value dilution caused by a low stock-to-flow ratio.
- storability: security against theft, loss or non-durability.
- portability: security against transfer costs (inversely proportional to the value-to-weight ratio).
3. Unforgeable costliness, predictable low inflation, storability, portability and:
- fungibility & divisibility.
- saleability: security against lack of social adoption.
4. Medium of Exchange monetary properties and:
- relatively smooth distribution: security against abrupt changes in value due to a relatively high concentration of it.
Trusted third parties are security holes, so any other characteristic that allows for trust minimization is also a monetary property.
A secure money allows for social scalability: the efficiency in social coordination.
The kind of money generally accepted as a medium of exchange is called currency.