Historically, the medium of exchange tends to come first, followed by store of value, and then unit of account. Here’s how it typically unfolds:
Medium of Exchange: Early forms of money usually begin as a medium of exchange—an asset or good that facilitates trade between parties. People use items like shells, livestock, or metals to simplify barter, making transactions more efficient.
Store of Value: As the medium of exchange becomes widely accepted, people start to use it to preserve wealth over time, recognizing it as a stable store of value. This can happen when the asset is durable and people believe it will hold its value.
Unit of Account: Once the medium of exchange and store of value are well established, the asset becomes a unit of account, meaning it is used to measure and compare the value of goods and services. At this stage, prices and debts are denominated in this asset, further solidifying its role in the economy.
In many historical cases (like with gold or silver), the medium of exchange evolves into a store of value, which is eventually formalized as a unit of account.