Etymology
Etymology: the study of the origin of words and the way in which their meanings have changed throughout history.
We often use words in-accurately & without thinking of their historical significance. You will discover that etymology will shed light on what we ‘have not’ been taught in our education system.
The coaching invitation to our members is to share your learning & understanding of these words with someone else. The fastest way to learn anything is to then teach/share it.
What's the difference between currency and money?
Money is anything which is generally accepted as a medium of exchange and currency is authorized by the government to be treated as money in the nation.
Money: To be classified as money, an element must have the following properties.
It must be portable,
homogeneous
divisible
common enough to be recognisable,
yet rare enough to retain its intrinsic value.
Money must take hard work to produce and have uses beyond that of just a simple financial tool.
Money needs to possess intrinsic value and be tradeable as a commodity independent of government decree.
Eg: gold is recognised across nations, throughout history.
Foundational Definitions:
Fiat: "Fiat" comes from the Latin word "fiat," which means "let it be done" or "it shall be."
In the context of currency, "fiat" refers to a government decree or order that establishes a currency as legal tender, without necessarily being backed by a physical commodity like gold or silver.
So, fiat currency derives its value from the trust and confidence people have in the government that issues it, rather than from any intrinsic value of the currency itself
Disadvantages of fiat currency is the Inflation risk (refer next definition): because “fiat” money is not backed by a physical commodity, governments can print more money, which can lead to inflation.
Inflation: Inflation is the ongoing increase in prices across an entire economy over time, representing the declining purchase power of a currency or Debasement of your currency.
When a government prints more money, it increases the total money supply in circulation.
This can lead to a situation where there is more money chasing the same amount of goods and services, causing prices to rise.
Inflation erodes the purchasing power of money over time, meaning that each unit of currency buys fewer goods and services than it did previously.
Dollar cost averaging: is the practice of investing a fixed dollar amount on a regular basis, regardless of the unit price. It's a good way to develop a disciplined investing habit, be more efficient in how you invest and potentially lower your stress level—as well as your costs.
For example, let's say an investor decides to invest $100 in gold every month. If the price of gold is high in a particular month, the investor will purchase fewer ounces of gold for their $100. Conversely, if the price of gold is low, they will be able to purchase more ounces for the same amount of money.
Over time, this strategy can help smooth out the impact of market volatility and potentially reduce the average cost per ounce of precious metals purchased.
Dollar-cost averaging is favoured by some investors because it removes the need to time the market and reduces the risk of making large investments at inopportune times. Instead, it encourages consistency and discipline in investing over the long term.
Decentralized: A decentralized system can be defined as one in which most decisions are made at the local level (self level).
Decentralization is when the authority and decision-making power is distributed or delegated away from a central, authoritative location or group and given to smaller factions.
In relation to precious metals, because they aren’t controlled by any single entity or government and can be purchased privately and anonymously.
Precious Metals: are metals that are rare and have a high economic value due to various factors, including their scarcity, use in industrial processes, hedge against currency inflation, and role throughout history as a store of value. The most popular precious metals with investors are gold, platinum, and silver.
