It is useful to decide on a definition of money. Galbraith (1) writes:

“Television interviewers...begin interviews with economists with the question: ‘now tell me, just what is money anyway?’ The answers are invariably incoherent. The reader should proceed in these pages with the knowledge that money is nothing more and nothing less than what he or she always thought it was - what is commonly offered or received for the purchase or sale of goods, services or other things.”

This is the essence of money - those pieces of metal and slips of paper you carry in your pocket look worthless because they are of no intrinsic worth.

It is only the value you and someone else agree on which gives them any worth at all.
Notes and coin are, now they are no longer tied to the value of gold held at a Central Bank, of value only by common consent. Cash is merely a common means of exchange, a medium by which those who want to buy and sell can do so without resorting to barter. If, as in Russia today and in Germany of the 1930s, people lose faith in the currency, they fear that it will fall in value.

They demand more cash for the goods they give you and, in turn, you will demand more cash for the value of the goods or services you sell, including your time which you sell as an employee. As everyone demands more cash for the same amount of goods, services or time there is a spiral effect and inflation becomes rampant.

But if the object is merely to have enough cash to buy food, to be able to pay for the car you want or to dress well, then a loss of faith in one currency may mean that people simply switch to another. So long as everyone agrees on the value of the tokens used, it doesn’t matter whether the tokens have official sanction.

It ceases to matter whether the paper has “Bank of England” or any other symbolic wording on it. In fact, it ceases to matter whether the money is in any way recognisable as cash. It need not be small, it need not even be moveable. It might be a car, a house, a racehorse. More, it not even have tangible form.

Electronic money is a misnomer: there is no money in any previously accepted sense of the term. There is only an electronic pulse and the hope that someone, somewhere, will recognise it as value and honour it. This process, known as "dematerialisation," is a huge problem not just in relation to money but in relation to all manner of things where there used to be a tangible item but now there is only a regenerated image of what is hoped to be the original.

It is important to know this because the definition of money, in money laundering laws in the UK, Ireland and many other jurisdictions, takes into account the fact that money means many things other than cash. Some countries try to include only cash, or cash equivalents, in their definition of “money” which can be laundered.