Monetary Properties
Bitcoin exhibits key monetary properties that make it suitable as both a medium of exchange and a store of value. These properties emerge from Bitcoin's technical design and economic model.
Core Monetary Properties
| Property | Definition | Bitcoin Implementation |
|---|---|---|
| Scarcity | Limited supply that cannot be arbitrarily increased | Fixed 21 million cap, predictable issuance via halving schedule |
| Divisibility | Ability to divide into smaller units | 8 decimal places (1 BTC = 100,000,000 satoshis). See Denominations for the full unit table. |
| Portability | Easy to transport and transfer | Digital, transferable globally via internet, 24/7 |
| Durability | Resistance to wear or destruction | Digital (no degradation), distributed across thousands of nodes |
| Fungibility | All units interchangeable | Technically fungible, though blockchain analysis can trace history |
| Acceptability | Others willing to accept as payment | Growing adoption among millions of users and thousands of merchants |
Additional Properties
Verifiability: Digital signatures prove ownership cryptographically. Anyone can verify transactions on the public blockchain, and counterfeiting is mathematically impossible.
Programmability: Bitcoin Script enables conditional transactions: time locks (CLTV, CSV), multisignature requirements, and basic smart contracts.
Censorship Resistance: No central authority can block transactions. The global, permissionless network makes shutdown impractical.
Comparison to Traditional Money
| Property | Fiat Currency | Gold | Bitcoin |
|---|---|---|---|
| Scarcity | Can be printed indefinitely | Limited but unknown total | Fixed 21M cap |
| Divisibility | Cents (2 decimals) | Difficult to divide | 8 decimal places |
| Portability | Physical cash limited; digital requires banks | Heavy, expensive to move | Digital, instant global transfer |
| Durability | Paper degrades; digital depends on banks | Excellent | Distributed across thousands of nodes |
| Verifiability | Counterfeiting possible | Requires expertise | Cryptographic proof |
| Censorship | Accounts can be frozen | Physical seizure possible | Resistant (no central control) |
| Volatility | Low (developed countries) | Low | High (currently) |
| Acceptance | Universal (within jurisdiction) | Limited | Growing |
Economic Functions
Store of Value: Scarcity and deflationary supply support long-term value preservation. High short-term volatility, but growing institutional adoption as a "digital gold" asset.
Medium of Exchange: Base layer handles ~7 TPS with fees that vary by demand. Lightning Network enables fast, low-fee payments for everyday transactions.
Unit of Account: Still developing. Prices are primarily quoted in fiat (USD), though some communities price goods in satoshis.