Why Bitcoin Matters as a Unit of Account: Beyond Traditional Currency Measurement

The Forgotten Function of Money

When we talk about what makes money valuable, most people think of its ability to store wealth or enable transactions. But there’s a third critical function that often gets overlooked: serving as a unit of account—essentially, being the yardstick we use to measure the value of everything around us.

Think about how you compare prices at a grocery store, negotiate rent, or evaluate your investment portfolio. You’re not just trading goods; you’re using a common denominator to translate the value of completely different things—apples, apartments, stocks—into numbers you can actually work with. That standardized measuring system is what we call a unit of account.

Currently, governments worldwide handle this through their national currencies. The U.S. dollar serves this function domestically across America, while the euro does so in Europe. When it comes to international business, the dollar has emerged as the global standard—companies price oil, negotiate international contracts, and compare economies all through this single lens.

What Actually Qualifies as a Reliable Unit of Account?

For something to work as a genuine unit of account, it needs two fundamental properties:

Divisibility is the first requirement. The measurement tool must break down into smaller pieces without losing accuracy or value. You need to price both a house and a candy bar within the same system. If your unit of account can’t subdivide cleanly, comparison becomes impossible.

Fungibility is equally critical. Every unit must be identical in value to every other unit. One dollar doesn’t have slightly different purchasing power than another dollar from the same country. This interchangeability makes calculations predictable and transactions trustworthy.

Beyond these basics, the gold standard would be stability. If your measuring stick keeps changing length—which is essentially what happens during inflation—it becomes useless for meaningful comparison.

How Inflation Breaks the Measurement System

Here’s where traditional currencies hit a serious problem. When governments print money to fund programs or stimulate growth, they introduce inflation. The unit of account remains nominally the same, but it loses purchasing power over time. A dollar today doesn’t buy what it bought five years ago.

This creates chaos for anyone trying to make rational decisions. Savers can’t accurately calculate real returns. Businesses struggle with long-term planning because the value of future earnings becomes murky. Investors must constantly adjust for inflation rather than focusing on actual growth. The unit of account becomes less reliable as a measurement tool, forcing people to think in multiple currencies—nominal and real—simultaneously.

Economists and businesses have theorized for decades that an ideal unit of account would operate like the metric system: standardized, unchanging, universally understood.

Bitcoin Reimagines the Unit of Account

This is where Bitcoin fundamentally shifts the conversation. The network operates with a fixed, mathematically predetermined supply: exactly 21 million coins, no more. This isn’t a policy that could change with a new administration or a central bank decision. It’s written into the code itself.

Because Bitcoin cannot be inflated through printing, it theoretically provides what fiat systems cannot: a truly stable unit of account. When you price something in Bitcoin, you’re not just recording today’s value—you’re creating a measurement that should retain meaning across decades because the total supply never expands.

Consider the implications for international trade. Businesses could price goods in Bitcoin without worrying about currency fluctuations or exchange rate risk. A manufacturer in Vietnam and a buyer in Brazil could negotiate terms without needing a third-party currency conversion. The friction disappears.

For long-term contracts and financial planning, a non-inflationary unit of account changes everything. A 20-year project could be priced in Bitcoin with confidence that the measurement remains consistent. Individuals could genuinely plan retirement savings without needing to guess inflation rates.

The Bigger Picture: Economic Decision-Making Transforms

If governments couldn’t print money to solve problems, what would they do instead? They’d have to focus on actual productivity gains, innovation, and smart investment. The temptation to paper over economic issues with currency creation vanishes. This forces more disciplined, forward-thinking policy.

Companies would make different choices too. Instead of relying on cheap credit availability, they’d have to build genuine value. Consumers, knowing their savings couldn’t be inflated away, might save more responsibly.

This isn’t theoretical—it’s what sound money has historically produced.

The Reality Check: Bitcoin Isn’t There Yet

Here’s what we need to acknowledge: Bitcoin remains young and volatile. While it checks the boxes for divisibility and fungibility, price swings currently make it unsuitable as a practical unit of account for everyday pricing. You don’t want the cost of your morning coffee fluctuating by 5% daily.

Bitcoin also hasn’t achieved universal adoption. Until more of the global economy accepts and prices in Bitcoin, it can’t function as the primary unit of account. That requires critical mass, which is still developing.

But the potential is undeniable. If and when Bitcoin reaches genuine global acceptance and volatility settles, it could become the most reliable unit of account humanity has ever created: censorship-resistant, inflation-proof, and truly borderless.

For now, it represents a philosophical and technical proof that the current system—with its inflationary pressures and political vulnerabilities—isn’t the only way to measure value. And that alone is worth paying attention to.