Medium of exchange
A medium of exchange is accepted not for immediate consumption, but because it can be spent again. It reduces the double coincidence of wants. Its usefulness increases with acceptance, settlement speed and predictable transfer costs.
Acceptance is not binary. The euro is highly usable in the euro area but less so elsewhere. A payment card is convenient but depends on an account, network, merchant and issuer rules. Bitcoin may be accepted directly or through an intermediary, while its reach and ease of use differ across regions.
Unit of account
A unit of account is the language of prices and contracts. It lets us say that coffee costs three euros, compare rent with wages and prepare a budget. The accounting unit may work even when a particular payment is technically made through another instrument.
Short-term purchasing-power stability helps planning. If a unit's price against common goods swings sharply, merchants often continue to account in a steadier currency and merely convert the amount at payment. In most places, Bitcoin is currently more a payment asset than the principal unit of account.
Store of value
A store of value carries some purchasing power from today into the future. Perfect preservation does not exist: cash loses purchasing power through inflation, bonds carry interest-rate and credit risk, property requires maintenance, and Bitcoin has high price volatility and key-loss risk.
Suitability depends on horizon and purpose. Tomorrow's rent needs liquidity and little short-term fluctuation. A long-term reserve may tolerate different risks. Calling something a store of value is therefore not a price guarantee, but a question of outcomes, risk and time.
- payment: can the asset practically be transferred to another party?
- accounting: are prices and obligations expressed in it?
- storage: how reliably does it carry purchasing power through time?
Bitcoin through the three functions
Bitcoin enables global transfer without a central operator's permission and follows a predictable issuance schedule. Those are strong properties for some payments and long-term holdings. Its base layer also has limited capacity, users bear responsibility for keys and its market price can move sharply.
We need not decide with one word whether Bitcoin is or is not money. It is more precise to ask which function it performs, for whom, where, at what cost and over what period. That makes comparison with cash, deposits or gold possible without marketing shortcuts.