What Is Good Money? The Properties of Money Compared

Short answer: Good money is scarce, durable, divisible, easy to transport, worth the same everywhere, easy to verify and widely accepted. No money meets all the properties of money perfectly. The euro and the franc are practical but can be created at will. Gold is scarce but hard to move. Bitcoin is scarce and digital but swings hard.

You work for your money, save it and trust that it will still buy something in ten years. Whether that works out depends less on you than on the properties of the money itself. This article shows which properties of money there are, why some forms of money have lasted for centuries while others became worthless, and how the euro, the franc, gold and bitcoin compare side by side.

The three jobs of money

Before getting to properties, it is worth looking at what you need money for in the first place. Economics names three jobs:

The three are connected. What doesn't hold its value is poor for saving. What swings a lot is a poor yardstick for prices. And what nobody accepts is useless for paying, however scarce it is.

Rule of thumb: money is a technology for turning today's work into tomorrow's purchasing power. Good money loses little along the way.

The seven properties of money

People have used shells, salt, cattle, silver, gold, paper and cigarettes as money. What prevailed in the long run had certain properties in common.

1. Scarcity

Good money cannot easily be increased. If someone can produce more of it with little effort, they will, and the value of all existing units falls. This is the most important property, because it decides whether your savings will still be worth something in ten years.

A historical example: in the Roman Empire, silver coins at first consisted almost entirely of silver. Emperor after emperor mixed in more base metal to mint more coins from the same silver. By the 3rd century they contained only a few percent of silver, and prices rose accordingly.

2. Durability

Money must not spoil, rust or decay. Salt and grain have been used as money but spoil or get damp. Gold, on the other hand, doesn't rust, and coins from antiquity are still gold today. Euro notes last a few years and are then replaced by the central bank. Bitcoin exists as an entry in a database kept on tens of thousands of computers worldwide, and it doesn't wear out.

3. Divisibility

You need to be able to pay small and large amounts. A cow as money is impractical if you want to buy a loaf of bread. The euro and the franc divide into 100 cents or Rappen. Gold can in theory be divided finely, but a coffee would be just 0.03 grams. A bitcoin divides into 100 million satoshis, or sats for short.

4. Portability

Money must be easy to move, including across borders. Banknotes and bank balances are strong here, as long as banks and states play along. Gold is heavy: €100’000 in gold weighs almost a kilo, €1 million almost nine kilos. Bitcoin weighs nothing. If you carry your seed phrase safely, you can take any amount across any border.

5. Fungibility

Every unit must be worth the same as every other. A euro is a euro, no matter whose pocket it comes from. Experts call this fungibility. That is why diamonds are poor money: every stone is different and has to be valued individually.

With bitcoin this is not entirely a given. Because all payments are public, some exchanges reject coins that demonstrably come from hacks or fraud. For ordinary users this hardly matters, but it is a real limitation.

6. Verifiability

You must be able to tell quickly whether money is genuine. With euro notes, watermarks and holograms help. With gold bars it is harder: fakes filled with tungsten are hardly recognisable from the outside and need a testing device. Bitcoin is checked completely by your own software: your own node verifies every payment and every block since 2009 and rejects forgeries automatically.

7. Acceptance

Money is only as good as the number of people who accept it. Here the euro and the franc are unbeatable: they are legal tender, taxes are paid in them, every shop takes them. Hardly anyone takes gold in everyday life, but dealers and central banks worldwide do. Bitcoin is still rarely accepted in everyday life, but it can be exchanged for any currency around the clock.

How money forms by itself when no central bank prescribes it is shown by a famous example from the Second World War: in German prisoner-of-war camps, cigarettes became money. They were uniform, durable, divisible, easy to carry and in demand. The British economist R. A. Radford, a prisoner himself, described in 1945 how prices rose when new Red Cross parcels full of cigarettes arrived: inflation in miniature.

The euro, franc, gold and bitcoin compared

The table rates the seven properties of money for the four forms relevant to you in Germany, Austria and Switzerland. It rates how well each money meets the property today.

Purchasing power: Eurostat HICP Germany and LIK (Swiss consumer price index) Switzerland, 2000 to 2025, details in the article Inflation and loss of purchasing power.

The table shows the basic problem: the euro and the franc are an excellent medium of exchange and unit of account, but a weak store of value. Gold is a good store of value but a poor medium of exchange. Bitcoin combines scarcity with digital mobility, but is still too unsteady as a unit of account.

Scarcity in numbers: who can increase the supply?

Scarcity can be measured: how much is added to the existing stock every year? The smaller this share, the less your part is diluted.

Sources: ECB M3 statistics, World Gold Council, bitcoin block height 975’626 according to mempool.space.

The euro money supply M3 has almost quadrupled since the euro was introduced in 1999, from €4.45 trillion to €17.72 trillion. With gold, output rises when the price rises, because more expensive mines then become profitable too. Bitcoin has no such mechanism: more computing power makes the search for new blocks harder, not more productive. After the next halving in 2028, growth falls to about 0.4% a year. Whether the growing money supply directly drives the bitcoin price is shown in the data comparison Money supply M2 and bitcoin.

How the fixed cap is anchored in the code and when the last bitcoin will be created is explained in the introduction What is Bitcoin?

What happens when money loses its properties

Money rarely loses its properties overnight. Usually it happens gradually, and the consequences are borne by those who save it.

• Germany 1923: the Reichsbank printed money to pay for government spending and reparations. In November 1923 one US dollar cost 4.2 trillion marks. A whole lifetime's savings were worthless.
• USA 1933: with Executive Order 6102, US citizens had to hand over their gold to the central bank in exchange for dollars. After that the dollar was devalued against gold. Anyone who kept gold at a bank could not resist.
• 1971: President Nixon ended the convertibility of the dollar into gold. Since then no major currency has been tied to anything scarce.

From this a rule can be derived that economists know as Gresham's law: if there are two kinds of money with the same face value, people spend the worse and keep the better. That is exactly what many bitcoin holders do: they pay with euros or francs and save in bitcoin.

Where bitcoin is still weak as good money

Bitcoin leads on scarcity, divisibility, portability and verifiability. Looked at honestly, though, it has three weaknesses.

It swings hard. In 2022 bitcoin fell 62% in euros. Since the record high of 6 October 2025 it has lost about 40%. That is no good as a unit of account for rent and salaries. In the long run the direction has so far clearly been up, but you have to hold on for years.

It is rarely accepted in everyday life. In Germany, Austria and Switzerland you mainly pay with bitcoin at online retailers or in individual shops. In Lugano, Switzerland, many shops accept bitcoin, but that remains the exception. A digital euro, by contrast, would be legal tender everywhere, but its supply would stay in the hands of the ECB. The comparison is in Digital euro and CBDCs vs. bitcoin.

You carry the responsibility yourself. Without a bank there is no customer service. If you lose your seed phrase, the money is gone. How to protect yourself is in the guide How to store bitcoin safely.

What the Power Law says about volatility

bitcoin-powerlaw.com's Power Law model describes the long-term trend of the bitcoin price and a lower bound, the floor, at 42% of the Power Law line. On Nov 13, 2026 bitcoin was at €63’237 (CHF 58’380) and the floor at about €60’660 (CHF 56’000), so the price was only 4% above it.

Four years earlier, in November 2022, the floor was about €15’360. It has almost quadrupled since then, while prices in the euro area rose by about 10%. The model describes the past and is no guarantee; how it is built and where its limits lie is in the methodology and in the article The Bitcoin Power Law explained.

A worked example: gold and bitcoin in everyday life

How many sats you get for an amount in euros or francs you can work out here:

How to check your own money

You don't need to be an economist to assess your money. Five questions are enough:

1. Who can increase the supply? A central bank, a mine or nobody? The more easily new units are created, the faster your unit loses value.
2. How much purchasing power has it lost in 20 years? For the euro and the franc, the figures are in the pillar article on Inflation and loss of purchasing power.
3. Who can take it from you or freeze it? Bank balances can be frozen, gold in a safe deposit box confiscated. Bitcoin in self-custody only if someone gets hold of your seed phrase.
4. Can you check it yourself? Do you know whether your gold bar is genuine, or whether your exchange really holds your bitcoin?
5. Do you need it in the next few years? Money for the next few months belongs in euros or francs. For storing value over decades, scarcity counts for more than a calm price.

The Academy covers the basics of money and bitcoin calmly and step by step under Basics. How states themselves think about gold and bitcoin as reserves is shown in the article Countries with bitcoin reserves, and whether bitcoin can compete with gold there in the article Bitcoin as a reserve currency. Where the idea comes from that good money emerges in the market rather than by law is explained in The Austrian School and bitcoin.