Cash

Cash is any asset used as a unit of account, medium of exchange, and store of value; most importantly, cash is a bearer instrument with no counterparty risk.

Cash is measured by M0, otherwise known as the monetary base. Many merchants accept cash payments to avoid credit card processing fees and bounced checks. For this reason, cash remains the most widely accepted payment method and the most likely to be accepted by a business in exchange for goods or services.

Bitcoin is a form of cash.

Before the proliferation of banknotes, the ancient Roman imperial government minted coins from pure silver as a form of cash. At first, Roman coins were approximately 90% silver. But over time, the government would seize those coins from citizens, melt them down, and dilute the purity of each coin. This effort helped the Romans fund their military with debased cash, but eventually, each coin contained less than 5% pure silver.

Banks and accounting firms define cash as all currency, bank balances, checks, and money orders which comprise M0. Cash is the most liquid asset available because cash can be converted into other assets quickly and easily. Accordingly, cash is the first asset listed on a company’s balance sheet, which orders assets by their liquidity.

Fiat cash is useful as a medium of exchange and unit of account. However, because the fiat cash supply is controlled by sovereign governments, it is not a strong store of value. Bitcoin can be used as a medium of exchange, unit of account, and is a strong store of value.

➤ Learn more about why Bitcoin is a better store of value than fiat money.