Moe on Nostr: I had a nice discussion about this topic a few days ago. Good post 👍 ...
I had a nice discussion about this topic a few days ago. Good post 👍
quoting note1f8m…rlsjLet's clear up some monetary concepts, since many popular economists and commentators continue to mix them up.
Store of value (SoV):
The ability of an asset to maintain the owner's purchasing power over time. The greater the ability to do so over a longer period of time, the better SoV the asset has.
Medium of Exchange (MoE):
The ease of which an asset can be exchanged for goods and services, anywhere, and at any time.
Unit of Account (UoA):
Pertains to the short-term volatility of a monetary good. The higher the short-term volatility, the more difficult it is to use the monetary asset to price goods and services. (For instance, think of a small grocery store owner needing to put price tags on all of its food items. The more volatile the UoA, the more frequently he/she must adjust the prices, which is quite burdensome.)
With these definitions in mind:
- The US dollar is a poor SoV (but better than most/all other fiat currencies); an excellent MoE (the best in the world, in fact); and a very good UoA.
- In 2024, #Bitcoin is an excellent SoV (the best in the world, in fact); a poor (but slowly improving) MoE, and a poor UoA (given its extreme volatility).
FWIW, I expect Bitcoin to maintain its #1 SoV ranking indefinitely, while seeing slow improvements over the coming decade regarding its MoE and UoA capabilities.
Hope this helps. 🍻