Token money is money whose face value exceeds its cost of production. Most modern coins used in circulation are token money, as are paper notes. It is a subsidiary of standard money. Token money is exchanged at a value rate independent from its commodity value. If the money is metallic it is made out of inferior metals such as copper and nickel.
Token money gives the holder no claim to legal redemption in terms of some object possessing an intrinsic value. As such all money in the whole Western world is token money. With token money, exchanges are not considered fully complete because the exchange of value is not equivalent. Value is hoped to be rendered at some future time. Examples of this include bills of exchange or negotiable instrument and certificates. Financial cryptography enables digital token money deployment of digital currencies such as Bitcoin.
Video Token money
Origin
It has been used since ancient times. Plato distinguished between tokens and real money.
Maps Token money
Value
Token money is also money whose face value exceeds its cost of production, i.e. the intrinsic value is lower than the extrinsic value. This means that the actual worth of a note or coin is much less than what we use it for. The cost of production of token money is less than its actual value, for example with convertible currency, collector notes, souvenirs, coupons, some retired US banknotes and per 1986 banknotes printed in regulation size and only on one side with authorization are actually worth more dollars than when issued.
See also
- Bearer instrument
- Bullion
- Store of value
- Token coin
References
Source of the article : Wikipedia