Difference Between Money vs Currency
Currency and money are the two words used in our everyday lives, often confused as being a similar things. The terms money and currency would appear to be similar, but they are not. Further, they are sometimes used interchangeably in several scenarios. Several different theories suggest how currency and money are separate from each other. However, several theories also state the things as bad money and good money. You can consider good money like gold, silver, etc. On the other hand, bad money can be regarded as currency. That is often confusing now. Let us try to return to the basics.
The coins and bills that one may carry with oneself are not technically money but are currency. Most likely, they are a kind of fiat currency or currency that has no intrinsic value. In the past, rare metals like silver and gold were considered money, but today’s money has become far more intangible and is defined by the functions that it can fulfill.
Let us now define money as the medium of exchange, value store, account unit, and payment standard.
In this article, we will discuss the key differences between money and currency.
Table of contents
Money vs Currency Infographics
Here, we provide you with the top 6 differences between money and currency:
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Money vs Currency – Key Differences
The key differences between money and currency are as follows:
- The major difference between money and currency is that money is entirely numerical, i.e., it is only intangible, which one cannot touch or smell. In contrast, we can feel currency and smell, and it is tangible.
- Check, online mode, etc., are all the types of money stated earlier. All that is in hard currencyHard CurrencyHard currency is a type of currency issued by countries that all investors and nations can rely on. , whether coins or currency notes, can be considered a currency, although those also represent numbers.
- One needs to print currency to have them in plenty, and it is obvious it is the work of the government. In contrast, there is no requirement to print money as intangible and can only be seen as numbers. For example, when you shop online and purchase any product, you must enter your bank details. You would notice transferring numbers from your bank account to the merchant’s account.
- Money is comparatively easier to be traded for a commodity or any service. In comparison, currency, however, is also easy to exchange. Nevertheless, it does carry the small inconvenience of maintaining the same with oneself. When exhausted, you need to go to a bank and withdraw.
- Currency can be termed as that money that brings the latter to life.
- Currency must be in circulation to be traded and grow. At the same time, money is intangible and can be easily circulated anywhere.
- Currency has its limitations. When one travels or changes the country, the physical currency needs to be exchanged for that country’s cash as none of the countries have the same currencies; they all print their currency. Money gets easily converted into another currency using the exchange rate facility, again a number.
- We can exchange a fiat currency for services and goods, but in the end, it has no intrinsic value. In contrast, soft money has inherent value.
- In earlier days, the government used to print currency by backing the same with gold and silver, and for money, it would require no such thing.
Money vs Currency Head-to-Head Differences
Let us now look at the head-to-head differences between money and currency.
|Basis – Money vs. Currency||Money||Currency|
|Basic Definition||One cannot touch or smell money. However, money can be seen in numbers.||Currency is the promissory note or coin presented in the form of money.|
|Concept Type||Money is an intangible concept.||Currency is a tangible concept.|
|Basis Form||Money takes the form of numbers.||Currency takes the form of hard plastic or coins or says the currency notes.|
|Support||Many different things back the money. For example, if one possesses money in a bank account, a cheque (kind of money) would be supported.||Fiat money is the currency backed by that country’s government.|
|Examples||Online mode, check savings bank account, etc.||Coins, Hard currency notes, etc.|
|Transfer Mode||One can transfer money through an online method.||One must transfer currency via physical, i.e., hand-to-hand transfer.|
- As stated earlier, money is a broader term than currency and mostly embraces numbers. At the same time, the currency is a narrower term and includes only hard currencies, i.e., notes, coins, etc. Fiat money Fiat MoneyFiat money is a currency that is declared by the government to be legal tender and has no physical backing such as gold; rather, the value of fiat money is derived from the market's demand-supply relationship. India's and America's fiat currencies are the India Rupee and the US Dollar, respectively. is the physical money (coins and paper moneyPaper MoneyPaper money is a country's currency in banknotes that have a specific value and pay for goods and services. Paper money holds a country's government backing while the central bank controls the note's printing and circulation.), while representative money which is something that represents the intent to pay that money like a cheque.
- Most modern money is now fiat money because most governments have printed too much money to compete with inflation. For example, the United States dollar had now shifted from representative money to fiat money when in 1971, President Nixon decided to abandon the gold standard.
- Further, a new concept nowadays running hot is bitcoin BitcoinBitcoin is a digital currency that came into existence in January 2009, speculated to be created by Satoshi Nakamato, whose true identity is yet to be authenticated. It provides lower transaction fees than the traditional online payment systems, is controlled by the decentralized authority, and is not like government-issued currencies. and cryptocurrency. This virtual money can easily transfer from one account to another. It does not require the government to print the money. These are backed with high security, which uses cryptography and cryptocurrencies to transfer funds directly between two parties in a transaction without requiring a trusted third party such as a credit card company or a bank. These safe transfers are facilitated by using private and public keys for security purposes.
- In modern cryptocurrency systems, a user’s account address or “wallet” has the public key, which will use the private key to sign in the transactions. As a result, fund transfers can be done with minimal or lesser processing fees, allowing the users to avoid the steep costs that most financial institutions and banks charge for wire transfers.
This article is a guide to Money vs. Currency. We discuss the top 6 differences between money and currency with infographics and a comparison table. You may also have a look at the following articles: –