Critics often say Bitcoin cannot be money because it’s not physical and isn’t backed by anything tangible. It’s a classic argument, usually delivered with great confidence. But you can’t make that claim without first considering what makes money useful in the first place.
🧠 Good money has standards
Talking about the qualities that make money a reliable tool for storing, exchanging, and measuring value might sound dry if you’re not in finance. But it matters. Money sits at the center of your daily life. It is how you buy groceries, pay for childcare, plan for the future, and live the life you want.
For thousands of years, gold held the top spot in the monetary hierarchy, but in our lifetime it has been replaced by paper money issued by governments, aka “fiat” currencies. Can these currencies be challenged by Bitcoin? Over the long arc of monetary history, it’s certainly possible. To see why, let’s break down the features that differentiate good money from bad money:
Durability
Money needs to hold up over time, both physically and in what it can buy. Gold doesn’t rust or decay, which is one reason its reign as money has lasted so long. A freshly minted US dollar bill can stay crisp for years, but its purchasing power fades long before the paper does. Durability is a measure of how well money weathers changing conditions.
Divisibility
Dividing money ought to be simple. Dollars and shekels do just fine here. Gold only functions until you need to sliver off a shaving to give someone exact change. Divisibility keeps money practical whether you’re buying a coffee or a second home.
Fungibility
Money works best if every unit is treated the same. Each individual dollar needs to have the exact same value, regardless of whether it was used for nefarious purposes in the past. Fungibility keeps every unit interchangeable so that payments stay simple, fair, and free of surprises.
Portability
Good money should travel well. Carrying cash in a wallet is effortless. Moving large amounts of gold, on the other hand, might require a small naval fleet. Portability keeps money practical whether you’re crossing a street or a border.
Verifiability
You shouldn’t need a UV lamp or a magnifying glass to trust your money. And you probably don’t have the equipment to check the karats in your gold. Verifiability ensures the value you expect is the value you receive.
Scarcity
History is full of failed currencies that collapsed because their supply expanded much faster than the economies they served. Scarcity is what prevents new units of money from flooding the system.
Track record
Money with history earns trust. Gold has thousands of years behind it. Fiat currencies have much shorter life spans. Most people have never heard of the Roman denarii, and that’s exactly the point. Track records matter because you want to store your wealth in a form of money with proven staying power.
If you’re a visual thinker, Fidelity Digital Assets published a side-by-side comparison of gold, Bitcoin, and fiat currencies across these seven attributes. It is essentially a scorecard for how each form of money performs in the real world.
When you look at these attributes as a complete set, it becomes clear why good money is rare. Each feature matters, and very few forms of money manage to hold their own across all of them at the same time.
Gold shines in some areas and disappoints in others. It has a long track record and relatively strong scarcity, but it’s not exactly built for a digital economy or a world of instant payments and global mobility. Fiat currencies work well for daily transactions, but they struggle with scarcity, and long-term purchasing power. Great for paying your bills, less great for protecting your future self.
Bitcoin stands out because it embodies these attributes in a way nothing before it has. And that's why, whether critics see it yet or not, Bitcoin isn't the outlier. It's the new benchmark.
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Want to learn more?
Understanding money is the first step. Understanding Bitcoin is the second.
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