🤔 What Is Money, Really?

You've used it every day

You've used money every day of your life. But could you actually explain what it is?

Most people can't. Let's fix that — it takes about 4 minutes.

Money has exactly 3 jobs

If something can't do all three, it isn't great money.

• 🏦 Store of Value — holds its worth over time
• 🔄 Medium of Exchange — people will actually accept it in trade
• 📏 Unit of Account — lets you compare the value of different things

Try buying a car with goats

How many goats is a car worth? How do you drive them to the dealership? Will they still be worth the same next year?

That's all three jobs failing at once: no clear unit of account, painful as a medium of exchange, and a shaky store of value.

Bad money fails at least one of the three jobs. Good money nails all three.

Try it: Money or Not?

Six candidates. For each one, pick the jobs you think it does well — then check.

Money has exactly three jobs: store of value, medium of exchange, and unit of account. Test six candidates — gold, dollars, cigarettes, bread, stock, bitcoin — and find out which ones actually qualify. Open the Money or Not? tool →

Quick check: Which job stops money from losing value while it sits in your wallet?

1. Medium of Exchange
2. Store of Value ✓
3. Unit of Account

Store of value is the job that protects your savings over time. It's also the job modern money is worst at — which is where this course is heading.

Quick check: A currency loses half its purchasing power in a year. Which job is it failing?

1. Medium of Exchange — nobody will accept it
2. Unit of Account — you can't price things in it
3. Store of Value — it doesn't hold its worth ✓

People may still happily spend it, and prices are still quoted in it. It's specifically failing as a store of value — and that's the failure that quietly costs you.

Next up

You've got the test. Now let's use it.

How did we go from goats, to gold, to paper bills in a pocket? Every step happened for a reason.