Money is an item that can be commutated in order to gain the merchandise.

The functions of money:

· Medium of exchange:

Medium of exchange is one of the most prominent aspects of money. Without the existence of money, individuals would confront disruption while transacting through barter system. Barter system is tied up with commutating one merchandise with another. Barter system has many complications involved. It is because, if a buyer has to attain a particular merchandise from a vendor, the former has to offer a merchandise which would be of an equal value to the merchandise he would be acquiring.

Alongside that, the product or service offered by the buyer to the seller in return of the merchandise must be the one that the seller wishes for. The introduction of money as a medium of trade has abolished this issue.

· Store of Value:

To be the mechanism of trade, the money must be storing a value. If the money is not being stored, it would not be able to administer the issue of barter system and later it cannot be treated as a source of trade.

On the other hand, it is not necessary for the money to be a store of value as it gets depreciated along with the inflation. Therefore, money is extremely liquid than other stores of value. It is due to the reason that, since money as a medium of exchange, is acceptable everywhere. Additionally, money is a store of value that can be migrated easily and be attainable in many estimations.

· Unit of Account:

Money also acts as a unit of account.

It fundamentally assists the sellers to assign the unit values to the merchandise in order to trade. In the view of values allocated to the units of the merchandise, the vendors would be deciding about the quantity and the quality of the merchandise they should be selling in the market. Whereas, the consumers will be buying the merchandise by comparing the quality and quantity with the unit values assigned by the vendors to those.

2. Bitcoin is a currency that is virtual. It helps solving the mathematical issues for the network of bitcoin. The owners of the computers are known as miners and their unique computer is known as the mining equipment. The payment for the miners will be made in the form of new bitcoins as they would tie up their power of computer with the bitcoin network. The computer network of the miners has 13,000 times more power than the top 500s super computers.

Medium of Exchange:

Bitcoin is traded on currency exchanges. People use bitcoins just like the money in order to purchase goods and services. People who purchase the bitcoin maintain a virtual wallet on their computer and repay for the bitcoin through cash or credit card. Some of the retailers accept the payment through bitcoin as it has no credit card charges. Nowadays, some of the big companies like- Dell etc. have begun to accept the payment through bitcoins. But most of the companies do not accept bitcoins, instead they go for the companies that process the bitcoins; in which those companies convert the bitcoins to normal currency.

Store of Value:

Bitcoin has less ability of storing the value. It is because of different hackings, burglaries and other network security issues. During the year 2014, a particular bitcoin exchange has been hacked by hackers due to which it has lost $425 million and became bankrupt. Another company that deals with bitcoin banking has also faced the loss of 896 bitcoins which were worth $670 000 as those were stolen by the hackers. By considering all these cases, the individuals who hold bitcoins do not deposit those in banks. But they keep those in their digital wallet. Also, the function of store of value in the case of bitcoin relies on its capacity of mode of trade. Since the function of mode of trade is not that successful, the bitcoin will not be having an opportunity to store the value.

Unit of Account:

Usage of bitcoins confuses the purchasers and the dealers. It is because, the bitcoins are not issued by the central government and the cost of the bitcoins get fluctuated in a short period of time. For example- the value of one bitcoin was $1000 during the year 2013 but it has got dropped to $179 in the year 2015. due to which the dealers must recalculate according to the varied prices. The bitcoins get exchanged at distinct prices on distinct exchanges, this would additionally influence the choices of the vendors which are related to the pricing.