Do people understand what money is?
Tags: Cryptocurrency, Money Mindset, Money Management, Financial Literacy, Money

FIRST PUBLISHED AT WINCO.IO

What if people understood money better, what if they knew what money is, would it change anything? What would be different? Would our economy change? Where do the price and value come from?

There is so much to know about money and its influence. But most of us do not seem very interested in understanding it as much as we work for it and make it disappear in the blink of an eye.

This blog post will not give you all of the answers, instead, I intend to instigate people to research on their own. The reason being is because understanding how money works cannot happen through a single blog post. So, it´s important to realize there are many fronts to this, and one will have to explore continuously to learn.

A while back, I wrote a blog about the importance of financial literacy in the cryptocurrency industry. However, I realized that it is essential to encourage people to understand MONEY. And although it is pretty much in the same line of thought, it´s not the same.

Many of us are born in families that go through all sorts of financial difficulties. And one of the reasons for that could be financial illiteracy. The illiteracy will then pass on from generation to generation.

Others may grow up in families that are so inserted in the financial world that financial literacy is the norm. But at the end of the day, numbers show that most of us do not understand money. And the view we have of money comes from the culture in which we are inserted.

How do you see money?

There are plenty of circumstances, factors, behaviors and beliefs that give money a negative connotation. As a matter of fact, an academic study found 125 significant factors of financial literacy.

Your culture, religion, how and where you grew up will mold a vision of what money is to you. How you see money instantly dictate how you treat it, just as with anything else in life.

An infographic shows the percentage of each country’s financial literacy, the U.S 57%, Canada 68%, Brazil 35%, Panama 27%, Italy 37%, France 52%, Denmark (with the highest score) 71%, UK 67%, Angola 15%, Somalia 15%, Egypt 27%, South Africa 42% and so on.

I´d say one of the main purposes for learning about money, is the contribution to society. Because a society that understands money can collectively contribute positively.

You may not think it is important for others around you to know what you know. Maybe you believe it is only important for you to learn, and to teach your children about financial literacy.

However, think with me, other people´s children will be the ones dealing with your child as they grow, they might work together, they will construct our society tomorrow together.

What good is there for you child to be prepared only to work with a world that is not? Only to work with other people in his or her community that are not? We need a community that is money conscious to make a positive impact in society as a whole.

Would you be ready to change they way you see money?

Everyone says we should make money our B*&¨%. But how? What does it even mean to make money our servant? These are questions that will be relevant for your studies.

“Money is a terrible master but an excellent servant.” — P.T. Barnum

Research how you can make money work for you.

What is money?

Money is a medium of exchange, anything that people use to buy, or exchange goods and services. Money is what people receive for selling things and/or services.

As people say, money makes the world go around.

Where does it get it´s value and price from?

It has the value and price we give it. Literally.

The dollar, for example, has the value that we have accepted it has. And it is backed by nothing other than that. Did you know that?

And the basic principle around it, whether physical money or virtual, is the law of supply and demand.

You might want to read “Coin Burn” to understand this principle in the crypto realm.

The increase in supply means the price goes down, and when it decreases price tends to go up.

So, check this out this example, if the total amount of a currency is 1 mil, and there are 1 mil coins, that means each coin is worth $1. Now, if you burn 33% of the coins, you then have 666,666 coins worth $1 mil. Each coin is now worth $1.50. What if you inflated that currency? It would then be worth less. And so on… makes sense?

Demand is well, demand. How many people want it? How badly do they want it? How much are they willing to pay for it?

A bitcoin today is worth almost 12K because of the supply(scarce) and demand, the number of people who want it and are willing to pay 12k for it. Same goes for fiat currency.

Most people who do not understand Bitcoin is because they do not understand the concept of money. They think physical money has more value than virtual, however, if you understand how money works then you´d know bitcoin is the same, but better.

Maria Bustillos says it better than I´d be able to put it, she says the “U.S. dollars is just an illusion more widely and fiercely believed”.

She continues by saying “U.S. dollars are not backed by anything other than the faith of the fools who accept it as payment and of other fools who agree in turn to accept it as payment from them. The main difference is that, for the moment at least, the illusion, in the case of dollars, is more widely and more fiercely believed.”

Ouch.

Final Thought

“He who will not economize, will have to agonize.” — Confucius

Money functions best when saved. Some of us think that having money means it must be spent. However, no millionaire has ever turned into a millionaire by spending money, instead, they have learned to save money.

Can you handle having money? Or do you have to spend it?

Saving is a great way to make it work for you, if you do it right. Investing is an even better way to make it work for you without losing purchasing power.

Did you even know money loses purchasing power? Did you know that the purchasing power of 1$ dollar in 1959 today is as little 12 cents? What can anyone buy with 12 cents today? Just saying…

As you can see there is so much to know about money!

Let us know in the comments if this blog has instigated you to learn more about money.

Check out HowMuch.com it is a great place to get started with learning about money.

The Winco Team