Money:  

The most basic definition of money is something that is acceptable in exchange for goods and services. Money is meant to appeal to all traders because it solves the problem of barter. The barter economy has several problems- barter requires that each person who wants to trade must be able to find a person who meets two conditions- he or she must want what the trader has to offer, and be able to offer something in exchange that the trader desire. Money solves the problem of barter. Money fulfills three classic functions: 

• Medium of exchange
• Store of value
• Unit of account  

Medium of exchange: As a medium of exchange, money makes it possible to trade without exchanging goods and services directly. Instead people can trade their goods and services for money. Money becomes something that everyone will accept in trade (because they can use it to satisfy their own wants), exchanges becomes quicker, simpler and easier to find.

Store of value: Money also makes possible to conduct an exchange without buying something in return. Instead of acquiring a good or service in exchange for her own goods and services, the person who makes a money based exchange receives stored purchasing power in the form of money. As long as money holds power over time, it becomes a store of this sort of value.

Unit of account: When money is used widely, it becomes a measure of goods and services worth. When people are bartering, they must use different standards. Money reduces all of that to a single standard, by giving each good or service a monetary value. The common standard allows people to compare and measure values in a way that is not possible in a barter system.

It should also be noted that in order for money to serve its purpose, it needs to have a consistent value and a relatively consistent level of supply.