What is a currency?

How crypto does and does not meet the definition

Currency is something that fulfills the following four functions, a unit of account, a store of value, a medium of exchange, and a standard of deferred payment.

A unit of account

Being a unit of account means being able to measure the amount of something and divide it into smaller portions as necessary. As a unit of account, crypto currencies are actually better than dollars, as they can be divided into incredibly small amounts e.g. a Bitcoin can be split into a 100 millionth (called a “Satoshi”). This advantage is somewhat small though since there are exceedingly few transactions that need to be conducted with fractions of a penny. These few transactions are facilitated digitally anyways, not with physical dollars and cents, so its advantage is even more miniscule.

A store of value

A store of value means that over time the currency retains its value with little deflation. This is necessary as it enables you to save your currency. In the past consumable goods like compressed tea, alcohol, and cocoa beans have been used as currency. This is not ideal as biological products will degrade over time, which means you have an incentive to spend it immediately. Here cryptocurrencies fall short since there price…