A:

The form of M1 money in an economy may change over time, but M1 money will continue to exist for the foreseeable future; it is the currency used as a medium of exchange. As long as goods need to be purchased, M1 money will be needed.

When calculating the money supply, economists count various pools of currency that are liquid and accessible or nearly liquid and easily convertible into cash. A common basis for determining the money supply at a given time is to identify all M1 funds. This includes hard currency in circulation, such as coins and paper notes, plus easily retrievable financial products such as checking accounts, traveler's checks and certain other demand deposits.

As technology progresses, so does the form of an economy's currency. At one time all currency was in the form of commodity money, which is currency either made from or based on an actual commodity (such as gold) that has value independent of its value as a medium of exchange. Most modern economies now use fiat money, which only has value because a government decreed it as legal tender and because people have faith in its value, the government that issued it and the economy's ability to produce desired goods. Today, physical currency is used less as electronic forms of payment have become more widespread.

An emerging form of M1 money is bitcoin, an alternative to central bank-issued fiat money. Though digital, bitcoin is easily converted to traditional cash through exchanges. Although the M1 money supply is evolving away from paper currency, money still remains in other forms.

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