We use it every day, but have you ever asked what is money actually? It isn’t just paper bills or metal coins.
Money is simply a technology standard for communicating value. Throughout history, humans have used seashells, salt, gold, and paper as money.
For something to work as “good money,” it needs three properties:
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Store of Value: If you save it today, it should still be valuable in 20 years (unlike bananas, which rot).
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Medium of Exchange: It must be easy to trade (unlike cows, which are hard to carry).
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Unit of Account: Be easy to count and measure.
The US Dollar is great at being easy to trade, but terrible at storing value. Inflation eats away at its purchasing power every year.
Gold is great at storing value, but terrible to trade (try paying for lunch with a gold nugget).
Bitcoin is designed to be the best of both worlds. It is easy to send anywhere like a dollar, but scarce and durable like gold.
So what is money? It’s whatever people agree has value. And for the digital age, more people are agreeing that verifiable digital code is better than paper.