Store of value and medium of exchange

[AlexGR]

It's not a poor medium of exchange. It's suitable for high worth transactions. Silver for low worth.

Really?  Your average cashier can identify fraudulent coins with 99%+ accuracy?

There are machines or tools that are pretty easy to use for that.

Gold and silver and completely worthless as a medium of exchange.

Eeehhh? The world has been working with gold and silver coins for millenia.

Those machines and tools are expensive

Also, most cashiers would not even know the exchange rate of gold/silver to local currency.

And how to handle change? Return fiat?

1. You don't get it. If gold and silver ARE currency, they do not need an exchange rate. They are the currency.

2. As for the machines and tools, there are plastic testers like this: http://www.youtube.com/watch?v=ohKdBJzwlYY

Pretty effective for diameter/weight/thickness... if the composition is correct, all parameters are checked.

3. Change = silver and copper, as it has been historically.

Pre-1933:

20$ = gold coin
10$ = gold coin
5$ = gold coin
2.5$ = gold coin
1$ = silver coin
0.5$ = silver coin
0.25$ = silver coin
0.1$ = silver coin
0.05 / 0.01 = non-silver (copper/nickel).

This has been that way for more time than the opposite (paper currency backed by nothing).

[twiifm]

Right now in the present time gold and silver are not currency.  USD is currency.

Unless you can show me a store where things are priced in gold or silver, its not currency

[AlexGR]

Right now in the present time gold and silver are not currency.  USD is currency.

Unless you can show me a store where things are priced in gold or silver, its not currency

We are discussing the unsuitability of gold and silver as currency and I say they are not unsuitable. If tomorrow the government decided they want to use gold and silver they would be OK for currency as they have always been for millenia.

Right now, gold and silver would be more than accepted in ~70% of the planet where local currency is considered very inflationary.

[twiifm]

Right now in the present time gold and silver are not currency.  USD is currency.

Unless you can show me a store where things are priced in gold or silver, its not currency

We are discussing the unsuitability of gold and silver as currency and I say they are not unsuitable. If tomorrow the government decided they want to use gold and silver they would be OK for currency as they have always been for millenia.

Right now, gold and silver would be more than accepted in ~70% of the planet where local currency is considered very inflationary.

Look up the word "currency"

[Harley997]

It's a standard phrasing: "Store of value and medium of exchange". But for me it sounds like "animals and dogs". Because for something to be a medium of exchange it have to be a store of value as well. Medium of exchange is just a short-term store of value.

Wouldn't it be more correct to say just "store of value" (short-and-long-term)?

A store of value relates to price stability. Something that stores value is something that is worth approximately the same tomorrow (or in a week, a month, a year or in 3 years) that it is today.

A medium of exchange is something that is accepted by the public for goods and services.

One example of something being a store of value, but not a medium of exchange is a refrigerator. In general a refrigerator will not gain or lose any substantial value over a few months. However it would not be realistic to offer someone fourteen refrigerators to buy a car as the other person would have little use for that many refrigerators even though they hold their value.

[Wary]

It's a standard phrasing: "Store of value and medium of exchange". But for me it sounds like "animals and dogs". Because for something to be a medium of exchange it have to be a store of value as well. Medium of exchange is just a short-term store of value.

Wouldn't it be more correct to say just "store of value" (short-and-long-term)?

A store of value relates to price stability. Something that stores value is something that is worth approximately the same tomorrow (or in a week, a month, a year or in 3 years) that it is today.

A medium of exchange is something that is accepted by the public for goods and services.

One example of something being a store of value, but not a medium of exchange is a refrigerator. In general a refrigerator will not gain or lose any substantial value over a few months. However it would not be realistic to offer someone fourteen refrigerators to buy a car as the other person would have little use for that many refrigerators even though they hold their value.

Agree, not every store of value is a medium of exchange. But every medium of exchange is a store of value (at least short-time one).

[Erdogan]

It's a standard phrasing: "Store of value and medium of exchange". But for me it sounds like "animals and dogs". Because for something to be a medium of exchange it have to be a store of value as well. Medium of exchange is just a short-term store of value.

Wouldn't it be more correct to say just "store of value" (short-and-long-term)?

I agree with you. The store of value is the prime function of money. This function also makes sure that the value is more than the use-value of the money stuff itself. For bitcoin, all value is money value, which is perfect because the hoarding of money therefore does not distort the production and consumption decisions.

This is important for the question of the scalability of bitcoin. Should there in the future not be enough capacity in the blockchain for all wanted transactions, only the large transactions will be conducted on the blockchain, and the function of bitcoin as a store of value will not be harmed.

The third function traditionally mentioned, the unit of account, well I don't give much attention to that. There is nothing that has a fixed value, so nothing can be a definite unit of account. That goes for dollars also. To calculate if a trade is profitable, you have to take into account that your chosen unit of account is not accurate. You can invent an index of adjustment based on your own values for that. Basically, you can not compute it exactly, you must apply your own valuations.

[Harley997]

It's a standard phrasing: "Store of value and medium of exchange". But for me it sounds like "animals and dogs". Because for something to be a medium of exchange it have to be a store of value as well. Medium of exchange is just a short-term store of value.

Wouldn't it be more correct to say just "store of value" (short-and-long-term)?

A store of value relates to price stability. Something that stores value is something that is worth approximately the same tomorrow (or in a week, a month, a year or in 3 years) that it is today.

A medium of exchange is something that is accepted by the public for goods and services.

One example of something being a store of value, but not a medium of exchange is a refrigerator. In general a refrigerator will not gain or lose any substantial value over a few months. However it would not be realistic to offer someone fourteen refrigerators to buy a car as the other person would have little use for that many refrigerators even though they hold their value.

Agree, not every store of value is a medium of exchange. But every medium of exchange is a store of value (at least short-time one).

You are correct that every medium of exchange is a short term store of value, but this does not do any good for something to be considered a currency. If something is a bad long term store of value (but good short term store of value) then people would not wish to invest in that currency as it could be worth a lot less when it needs to be spent. The same is true for savings and being paid a certain way.

Generally for something to be considered a store of value it needs to be a store of value over a longer period of time.