CBP - Certified Bitcoin Professional History and Properties of Money Questions and Answers 1 — Questions and Answers
Question 1: Which of the following is NOT considered a primary function of money?
- Speculation (Correct answer)
- Medium of Exchange
- Unit of Account
- Store of Value
Correct answer: Speculation
The three primary functions of money are: a medium of exchange, a unit of account, and a store of value. Speculation is an activity that can be done with money, but it is not a fundamental function of money itself.
Question 2: A software developer in Canada is paid in Bitcoin by a client in Japan. This transaction primarily highlights which property of money that Bitcoin excels in?
- Durability
- Portability (Salability across space) (Correct answer)
- Divisibility
- Scarcity
Correct answer: Portability (Salability across space)
This scenario demonstrates Bitcoin's exceptional portability, also referred to as salability across space. It can be sent across geographical borders quickly and efficiently without the need for traditional financial intermediaries. While other properties are important, the international nature of the transaction makes portability the most relevant answer.
Question 3: The historical progression from barter to commodity money, such as shells or salt, was primarily a solution to which problem?
- The problem of inflation
- The lack of government oversight
- The double coincidence of wants (Correct answer)
- The need for a durable store of value
Correct answer: The double coincidence of wants
The barter system requires a 'double coincidence of wants,' where two parties each have something the other desires. Commodity money emerged as a solution, providing a common medium of exchange that was widely accepted, thus eliminating the need for this double coincidence.
Question 4: Which property of money ensures that one unit of the currency is interchangeable with another unit of the same value?
- Divisibility
- Portability
- Durability
- Fungibility (Correct answer)
Correct answer: Fungibility
Fungibility means that individual units of a commodity or currency are interchangeable and essentially indistinguishable from one another. For example, one dollar is treated the same as any other dollar. This uniformity is a key property of good money.
Question 5: The concept of 'salability across time' is most closely related to which function of money?
- Medium of Exchange
- Store of Value (Correct answer)
- Unit of Account
- Means of Payment
Correct answer: Store of Value
Salability across time refers to a good's ability to hold its value into the future. This directly corresponds to the 'store of value' function of money, which allows individuals to save purchasing power for later use.
Question 6: When the United States officially abandoned the Gold Standard in 1971, the US dollar became what type of money?
- Commodity Money
- Representative Money
- Fiat Money (Correct answer)
- Cryptocurrency
Correct answer: Fiat Money
By severing the direct convertibility of the US dollar to gold, the currency became fiat money. Fiat money is a government-issued currency that is not backed by a physical commodity, but rather by the trust and credit of the government that issued it.
CBP - Certified Bitcoin Professional History and Properties of Money Questions and Answers 1
Which of the following is NOT considered a primary function of money?