What Is Money? (The Three Jobs)
In 1945, prisoners of war in German camps used cigarettes as money — not to smoke, but to trade. Cigarettes were portable, divisible, and universally valued. When you understand why cigarettes worked as money in a prison camp, you understand why Bitcoin works on the internet.
Think of money like a Swiss Army knife for value - it needs to do three jobs well. Store of value (savings that don't spoil), medium of exchange (what people accept for stuff), and unit of account (the measuring stick for prices). If any job fails, people find something better.
Simple definitions:
- •Store of value: Keeps your buying power over time (savings that don't spoil).
- •Medium of exchange: What people accept for goods and services.
- •Unit of account: The measuring stick for prices (like inches for length).
Analogy: Think of money like a backpack for value. A good backpack should be sturdy (store value), easy to carry (exchange), and have clear labels (unit of account).
In Venezuela during the 2018 hyperinflation crisis, people weighed stacks of bolivar bills instead of counting them — the currency had lost so much value that counting individual notes was pointless. Meanwhile, Venezuelans who held Bitcoin preserved their purchasing power. This is what happens when money fails at its most basic job: storing value.
Money is a technology. Like any technology, better versions replace worse ones. Bitcoin is the first money in history with a mathematically guaranteed fixed supply — making it impossible to "water down" through printing.
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