DNotes - Destined to Fulfill the Functions of Money
Since I have been preparing to write about the functions of money, I asked my six years old grandson, “What is money for?” “Buy toys”, he replied instantly.
Money is certainly used to buy toys and much more, but it actually has three functions that have been generally agreed to. There is a fourth function that has been floating around for years, but not always discussed. Perhaps because it is a hybrid that came about as we developed more ways to use money by accepting installment or deferred payments for current purchases. If that is true, digital currency will enhance the functions of money even further. DNotes is positioning itself to lead in exploiting this huge potential of various additional advantages digital currency has to offer over fiat currencies.
Medium of exchange:
Money is used as the most convenient and efficient vehicle as a medium of exchange for goods and services. It replaces the need to barter for goods and services, a highly unproductive and difficult system. Barter trade consumes unproductive time and resources to find and negotiate with the traders on both sides. As a result, everyone is willing to accept money in exchange for goods and services.
Unit of account:
Unit of account is a general consent on the value of a currency relative to a good or service or another currency (money). UD$3.00 can buy one gallon of Milk. 1 DNotes can be traded for 0.0001201 Bitcoin. This is a very simple concept with great implications, especially in the cryptocurrency world. It is reasonable to say that the cryptocurrency exchanges have been playing a very important role for “Unit of Account” for digital currency. When a cryptocurrency is de-listed by most or all the exchanges, its value can only be established through barter trade, threatening the very survival of the coin.
In theory, when a coin continuously become more available and its value consistently appreciate at a reliable and sustainable rate the general consent of its value is much more dependable than one that is not. As often the case in our industry, when the value of a currency is highly volatile with wide fluctuation of value, it is an indication that the general consent on the value of that currency is unsettled. Both uptrend and downtrend are likely to have been induced or manipulated; pump and dump. For long-term investor finding dependable general consent of value (unit of account) is very important.
Store of Value:
Money functions as a practical and convenient way to store value, allowing us to exchange money for goods and services at any time without worrying that the value may expire or rot away. This allows us to save for retirement or diversify in protecting its value by investing in different currencies, and other asset class.
DNotes as a worthy Store of Value is part of our strategic mission. This is hugely important to a number of DNotes projects, including the recently introduced Baby DNotes program. More will be discussed in future posts.
Standard of deferred payment:
Standard of deferred payment is frequently used for current purchases with deferred or installment payments. However, it is not always discussed as a function of money. This could be partly because it involves both the unit of account and the store of value functions. Accounting for inflation and potential devaluation of the currency, the $10,000 you agreed to pay for the used car purchased today but paid monthly over 24 installments is worth less in present value by the time it is paid in full.
Standard of deferred payment is used as a benchmark to determine what interest rate should be added to preserve the present value of that agreed price. An incentive of a higher interest rate is often added to help offset potential default risk. It can also be priced in as the selling price and advertise as 0% interest as a sales promotion.
What if someone would accept the same purchase with installment payments in DNotes?
I strongly encourage further discussions and comments. If DNotes can serve well in all the functions of money, with additional advantages, mainstream adoption of digital currency is a certainty. DNotes is positioned to be that currency. Building a solid foundation of trust and fundamental value has to be our trademarks. If money is for everyone, and so easy to understand and easy to use, DNotes as a digital currency for everyone must also be easy to understand and easy to use. That is a huge challenge our development team is working to overcome.
Wow. A lot to digest, but it brings to light that the vast majority of people do not even realize that money has more than one function: to buy things. If Dyna's vision of the future of crypto-currency VS fiat currency comes true, DNotes is positioned perfectly fulfill ALL the Functions of Money.
Well said, Yoda. DNotes could not be in better hands.
Smokey