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We class monetary properties into two groups: fixed and variable. Fixed properties are unchangeable characteristics that depend on the fundamental makeup of a money. For example, gold's fixed properties result from the Laws of Nature, which cannot be altered. Variable properties, on the other hand, can change depending on how the money is used in the real world. These include characteristics like acceptance, liquidity, and volatility.
Variable properties can improve or worsen based on usage. For instance, as a money becomes more widely used, more merchants will accept it, making it even more useful. It also tends to be more liquid and less volatile, as the exchange market for that money deepens.
On the other hand, if usage declines, these variable properties can deteriorate, making the money less useful and likely less desirable compared to other options. Variable properties can thus be thought of as arising from and feeding into a money’s network effect.
This can create feedback loops: improving relational properties encourage more use, which further enhances these properties, whereas deterioration can lead to less usage, which can cause further decline.