The paper “ Virtual Money Scheme” is an engrossing variant of the personal statement on finance & accounting. The development of money can be traced to seven major stages since its inception as a concept of trade. The first stage is commodity money which was widely used during pre-industrialization. Commodity money majorly involved the exchange of goods and goods hence the concept of commodity money (ECB, 2012). The second stage in the development of money is the fiat money which was developed in 700BC. Thirdly is the fractional Banking Money where people used to take portioned of their income in form of gold into the bank.
The fourth one is Fractional Banking Money + Central Bank ‘ Lender of Last Resort where reserves banking took center stage in the transactions and development of the banking system. The fifth stage is the development of liability management where people were borrowing money from the bank due to security and trading activities (ECB, 2012). The sixth stage in the development of money is Securitisation and lastly is the Market diffusion of money. Despite all these stages in the development of money, the three major functions of money relatively remain constant throughout the development stages of money, these include; The medium of exchange: - be it commodity money or fiat money, all of them were generally accepted as a medium of exchange by the society at large.
These made the transaction among societies easier and simple as the needs and wants of people could be made met. Unit of account- throughout the development of money, always money is regarded is a unit of measurement as always commodities could be viewed and quantified in terms of monetary value. Store of value; throughout the development of money, the money could be stored and retrieved for use in future so the money as always act as a store of value. Virtual money came into existence in 1980 after the establishment of World Wide Web, the development and growing in the use of internet encourages the use of virtual money. One of the reasons for development of virtual money is the existence of internet which as encourage the development of virtual communities.
The cyberspace as encouraged the existence of these communities as they could easily meet and interact and those with common interest and goals could pursue their goals (ECB, 2012).
European Central Bank, 2012 VIRTUAL CURRENCY SCHEMES
October 2012: http://www.ecb.europa.eu