Understanding Bitcoin Starts with Understanding Money

If I asked you: “What is money?” Would you be able to explain it? It’s a question I never really entertained until I discovered Bitcoin. But once you understand what actually defines money, you start to see why Bitcoin is so fundamentally valuable.

🧠 What Makes Good Money?

When you hear the word “money,” you probably think of dollars in your bank account. But money isn’t just cash, it’s a tool. And some tools are better designed than others.

Economists describe good money as having three key functions:

1. Store of Value – it should hold its purchasing power over time (and ideally increase).

   
   

2. Medium of Exchange – it should be a form of currency that's widely accepted for transactions.

   
   

3. Unit of Account – it should provide a stable way to measure value over time.

Let’s compare a few forms of money against that framework.

The Dollar

❌ Store of Value - 1/10

Dollars lose purchasing power every year because new ones are constantly being created. Over the past few decades, the dollar supply has grown roughly 7% annually, so a dollar today buys less than half of what it did in 1990.

✅ Medium of Exchange - 9/10

The U.S. dollar is an excellent medium of exchange - you can spend it almost anywhere. More than half of all global trade is conducted in US dollars.

❌ Unit of Account - 4/10

We’ve already established that the dollar is a poor Store of Value due to continuous money printing, which also makes it unreliable for measuring value over time. When dollars keep losing purchasing power, eventually your measuring stick stops telling the truth.

Gold

✅ Store of Value – 9/10 

Gold has held its value for thousands of years. It’s scarce, durable, and impossible to print. That combo has made it a proven way to preserve wealth across generations.

❌ Medium of Exchange – 2/10

Gold once worked as money but it's not fit for today's digital economy. It’s also heavy, hard to transport, and can’t be divided or verified easily, making it impractical for everyday use.

❌ Unit of Account – 2/10

Gold hasn’t served as a unit of account since 1971, when the U.S. ended the gold standard. Nothing today is priced in ounces of gold, and it’s no longer the baseline for measuring value.

Bitcoin

✅ Store of Value – 9/10

With a fixed and inelastic supply of 21 million coins, Bitcoin is engineered to preserve value. Despite its volatility, it has been the best-performing asset of the past decade and is rapidly becoming a digital store of value for the modern age.

⚙️ Medium of Exchange – 5/10

Bitcoin is still early as a currency, but progress is accelerating. Companies like Block, and Lightspark are making transactions faster, cheaper, and more scalable for everyday use.

⚙️ Unit of Account – 5/10

Bitcoin is beginning to emerge as a new way to gauge value. Investors are increasingly benchmarking performance in Bitcoin rather than dollars, asking, “Did I outperform Bitcoin this year?” In time, because it’s anchored to a fixed supply of 21m, Bitcoin has the potential to become a universal reference point for measuring real value.

In short:

• Dollars are great for spending, bad for saving.

  
  

• Gold is great for saving, bad for spending.

  
  

• Bitcoin may be the first money that’s good at both.

Why it matters:

Understanding money — what makes it work, and where it fails — is the foundation for understanding Bitcoin. Because Bitcoin isn’t trying to replace money. It’s trying to fix it.

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Ready to go deeper?

At humbl, our mission is to close the Bitcoin knowledge gap through clear, accessible education. We help individuals and teams understand Bitcoin’s fundamentals, and see it for what it is: the most important monetary innovation since the dawn of modern finance.

If you're interested in bringing Bitcoin literacy to your company or organization, we'd love to talk.