The tender everyone accepts as payment
Money is what everyone accepts as payment for goods or services, such as when people buy clothes or food. Most people actually use payment cards in everyday transactions, where the amounts (money) in the transaction are debited from the buyer's bank account and transferred to the seller’s account. Over 90% of daily transactions are made with payment cards, yet there was around ISK 72 billion in cash in circulation in society in mid-2024, i.e. in banknotes and coins. Online banking payments are also common.
Shells, gold, silver, etc. used in the past
In the past and in other societies, various means of payment have been used as tender, such as shells, precious metals (e.g. gold and silver), furs, and various other items – in addition to bartering.
Unit of account, medium of exchange and store of value
Traditionally money is considered to need to meet three conditions: Firstly, it needs to be able to measure price or value (tell us how much things cost), secondly, to be used as a medium of exchange (used as payment), and thirdly, to store value (e.g. as savings). If inflation is high, it can undermine the third condition.
Trust the weaving in the paper or metal
The coins themselves have little or no practical use, except perhaps for coin collectors and football referees who use the toss of a coin to determine which team starts with the ball and on which side of the field each team plays. Money is a kind of symbol or token and its use is based on people's trust that money can be used to purchase goods or services for the amount indicated by the numerical value of the money.