Money performs 3 main functions and they are:
Medium of exchange: Just like every other Fiat currency, cryptocurrency are accepted in some stores and companies but not all stores and companies. Crypto is growing in popularity and acceptance as a medium of exchange. Its acceptance is unaffected by your race or countries boundaries.
Store of value: This is where crypto performs best, if we exclude the few past unfavorable months. Fiat is known to reduce its purchasing power but the value of cryptocurrency is known to increase. Though, this is not true every seconds.
Unit of account/measure: Unit of account simply means 1 dollar in your wallet is equal to 1 dollar in your friends wallet, $100 in your bank account is equal to $100 in your neighbors account. So also is 1 btc in A's wallet equal to 1 btc in B's wallet. Unit of measure is when an iPhone X cost $999. The price is almost constant, if not constant all day, all month. The price might not change for months, so also are most goods. Cryptos are very volatile and perform quite poorly in this area.
medium of exchange : Let’s consider Bitcoin. Until you can use Bitcoin to purchase a Subway sandwich or purchase a coffee from Starbucks or pay for your parking permit, it’s essentially reserved for those intimately familiar with the inner workings of block chain technology. A safe and secure method of exchange, yes. Practical and universally accepted, no.
store of value : If I were a business selling crates of oranges, I would close my books on one day knowing Bitcoin was at $8902.99 only to walk in the office on the following day to discover Bitcoin was now $6,651.97. That is a massive tax. I effectively lost $2251.02 per coin. If I had three bitcoins “in the bank”, I would have lost $6,753.06. Bitcoin wasn’t able to keep it’s store of value.
unit of account.
Unit of account makes it easy for us to compare the cost of product to the cost of another product in the economy. The universality of the U.S. dollar (or any other stable currency) allows us to gauge the relative production and cost of goods throughout the whole economy thus making commerce easier. Given the fluctuations of Bitcoin, how can you properly compare prices on the darkwe…er, um on Amazon. This extra level makes shopping difficult.
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