You both are wrong. Dollars, bitcoins, and other currencies are NOT money. True money is Gold and silver (physical). Those I listed are just mediums of exchange (currency).
Don't you find that using completely different definitions from everybody else wastes a lot of time? Having to explain what you mean by all the words you use differently every time you're talking with someone new, I mean.
Nope. Do you?
Sometimes it is very useful to find a definition of something that actually explains what it is, how it works and what it does. I thought a lot about this and found that all current definitions of "money" are lacking. Bitcoins, namecoins, gold, silver, tobacco leaves, wampum, dollars, Euros, etc. are all commodities.
Fiat currency: dollars, Euros, and so on are a special kind of commodity where the amount of them in circulation is constantly monitored and controlled by a central bank. The job of the central bank is to keep the supply and demand for their currency in balance in other words to control inflation of their currency.
So what is money? Putting aside all historical, emotional and politically motivated definitions of money I have come up with my own personal working definition:
Money is the state of an unfinished transaction.
In other words if I do some work for you and you give me a meal then we have traded two things and the transaction is done. But if I work for you and you promise to give me a meal in the future then we have an unfinished transaction. This state creates money. We can simply write down on a piece of paper Joe owes Burt one meal to keep track of this or we can use the state approved method of keeping track of unfinished transactions and you can give me an agreed to amount of dollars.
No, I do not mind telling every new person I meet my personal definition of money as it sometimes leads to new insights into the economy, bitcoins, dollars, and a myriad of other subjects.
