Hacker News Reader

Comment by nk1tz | Hacker News Reader

We learned this lesson in 2016 during the Bitcoin scaling wars. The path to global unit of account does not begin with "medium of exchange" it begins with "store of value".

The primary purpose of Bitcoin is to be a store of value (the definition of money), without this achievement it cannot evolve to a medium of exchange (definition of currency).

View on HN

"Store of value" is not how economists (and most normal people) define money. Pretty much any non-degrading asset can be a store of value. That doesn't make them money.

To be money, something must fulfill three criteria: 1) be a medium of exchange, 2) be a store of value and 3) act as a unit of account. It helps if the something is also fungible, easily divisible, etc.

Missing the forest for the trees. Those three functions of money are the “cliff notes” description of money, but there is a deeper abstraction that all of those properties can be derived from: money is a ledger. In the case of cash or bitcoin, the ledger has a constraint that negative balances are not allowed.

Right, Bitcoin will never have a competitive advantage as a payment method (“medium of exchange”) but as long as there are healthy, liquid markets to convert between Bitcoin and fiat currencies it doesn’t really matter.

Store of value is absolutely not the definition of money, which is an inherently transactional concept...

Reply on news.ycombinator.com