account unit

What Is a Unit of Account?

A unit of account serves as a standardized "measuring stick" for recording and comparing value. It enables the prices of different goods and assets to be expressed using the same metric, making it easier to conduct accounting, settlement, and analysis.

In everyday life, currencies like the Chinese yuan (CNY) or US dollar (USD) typically serve as units of account: property prices, salaries, and loans are all denominated in these currencies. In the crypto world, many users prefer to use USD or stablecoins as the unit of account, converting the value of assets like Bitcoin and Ether into a common denominator for easier portfolio tracking and profit & loss analysis.

Why Does the Unit of Account Matter?

The unit of account shapes how you perceive prices, returns, and risks. If your measuring stick is unstable or inconsistent, your conclusions may be skewed.

For example, a transaction might show a profit when measured in USD but a loss when measured in Bitcoin, since changes in the reference unit can provide different perspectives. The unit of account also impacts budgeting, drawdown control, and performance evaluation. For instance, financial reporting requires a fixed unit of account to enable ongoing tracking and comparison.

As of 2025, most crypto users display portfolio values in USD or USDT on platforms, seeking a more stable measurement basis in volatile markets.

How Is the Unit of Account Used in Web3?

The unit of account appears in Web3 primarily in three areas: trading pair quotations, portfolio value display, and conventions for on-chain measurement.

First, on exchanges, many assets are quoted against USDT or USD, illustrating the practical application of the unit of account. Stablecoins—tokens pegged to fiat currencies such as USDT (pegged to USD)—are well-suited as standardized measures of value.

Second, portfolio pages or wallets typically convert holdings into a chosen unit of account, most commonly USD, USDT, or local currency (such as CNY), making it easier to view total value and P&L.

Third, blockchains also feature technical units of measurement; for example, Bitcoin’s smallest denomination is the satoshi, while Ethereum’s is the wei. These are technical units that define "measurement granularity," which—alongside the unit of account—shape how you assess value.

What Is the Difference Between Unit of Account and Medium of Exchange?

The unit of account is the "measuring stick," while the medium of exchange is the "transport vehicle." The former records and compares value; the latter is used for actual payments and transfers.

A medium of exchange might be cash, bank cards, or a crypto asset used for transactions. It moves value from A to B. However, you can record value using a different unit of account; for instance, you might pay with BTC but record value in USD. Sometimes the two coincide (USD is both unit of account and medium of exchange), while at other times they are separate (you trade with ETH but report in USDT).

How Is the Unit of Account Used in Trading?

In trading, the unit of account is fundamental to quoting prices and settling trades. You need to decide which unit will be used to measure prices and calculate profit or loss.

In the BTC/USDT trading pair, USDT is the quote currency—the unit in which another asset’s price is expressed. It acts as the unit of account within the trading interface. When you see "BTC = 50,000 USDT," you are evaluating Bitcoin using stablecoin as the measuring stick.

On Gate’s portfolio page, total asset value is often displayed in USD, USDT, or CNY for consistent performance tracking. Setting a unified unit of account makes P&L statistics, stop-loss ratios, and position management more intuitive.

What Should You Consider When Choosing a Unit of Account?

Selecting a unit of account should align with your daily life context, risk tolerance, and investment objectives. Follow these steps:

Step 1: Identify which currency you use for daily expenses. If you settle everyday costs in CNY, using CNY as your unit of account will better reflect real-world budgeting.

Step 2: Define your investment goals and time horizon. For stable hedging strategies, choosing a less volatile unit (such as USD or USDT) makes risk assessment easier.

Step 3: Assess the stability and accessibility of your chosen unit. Stablecoins (like USDT) are pegged to USD and offer convenience for obtaining and using value in crypto environments.

Step 4: Set a unified unit of account within your tools. On Gate’s asset valuation page, select one fixed unit and maintain consistency across reports and risk control sheets.

Step 5: Regularly review and document any changes in your chosen unit. If you switch from USDT to CNY as your reference, note it in reports to avoid confusion when analyzing performance or risk metrics.

What Are the Risks and Pitfalls Associated With Units of Account?

Choosing an inappropriate unit of account can lead to cognitive biases and financial risks. Common issues include:

First, stablecoin depegging risk. Stablecoins are tokens pegged to fiat currencies; occasional depegging events can distort valuations based on them. Monitor issuer disclosures and market liquidity closely.

Second, inflation and exchange rate risk. If you use local currency as your unit of account, inflation can distort your perception of returns; when dealing with multiple currencies, exchange rate fluctuations also impact performance evaluation.

Third, inconsistent units across reports or platforms may lead to inaccurate P&L calculations and complicate risk management.

Fourth, confusing technical and financial measurement units. On-chain minimum units (such as wei) define technical granularity and should not be used directly as financial reporting units.

For capital safety, always evaluate positions, leverage levels, and drawdowns using a consistent unit of account, set risk thresholds accordingly, and minimize misjudgments caused by inconsistent standards.

What Are the Future Trends for Units of Account?

As of 2025, USD and USD-pegged stablecoins remain dominant as units of account in crypto due to their global comparability and liquidity. With increasing adoption of regulated stablecoins and fiat bridges, local currencies may gain traction among retail users; however, for institutions requiring cross-border comparison and settlement, USD-denominated reporting will likely remain standard in the near term.

Looking ahead, wallets and exchanges will offer more flexible options for switching units of account and managing reporting standards—including alerts about depegging or exchange rate effects. For individual investors, maintaining consistent standards, regularly reviewing them, and employing hedging strategies will be key to keeping a clear perspective amid market volatility.

FAQ

How Is a Unit of Account Different From a Medium of Exchange?

A unit of account is a measure for valuing assets; a medium of exchange is an instrument for executing transactions. For example, the US dollar serves both as a unit of account (for pricing and accounting) and as a medium of exchange (for payments); Bitcoin often acts as a medium of exchange but is commonly priced in dollars as the unit of account. They serve distinct functions—one for valuation, one for payment.

How Does My Choice of Unit of Account Affect Trading on Gate?

Your chosen unit of account determines how your assets are displayed and valued. If you select USDT as your unit of account, your profits will be shown in USDT; if you choose CNY, they will be displayed in yuan. The choice does not affect your actual holdings—it simply changes how values are presented. Select the unit that best fits your habits and considers prevailing exchange rates.

Why Do Some People Use Stablecoins Rather Than Fiat Currencies as Their Unit of Account?

Stablecoins (like USDT or USDC) and fiat currencies both offer stable valuation. However, stablecoins have advantages such as 24/7 trading availability, strong cross-chain liquidity, and fast settlement speeds. In global trading contexts, stablecoins help avoid exchange rate risks and deposit/withdrawal delays; on exchanges, they can be used directly without banking intermediaries.

Will Frequently Switching My Unit of Account Disrupt My Transaction Records?

Frequent changes won’t affect your actual holdings or executed trades but can complicate historical P&L reconciliation. Switching units often leads to confusion over cost bases; it’s best to choose one primary unit for long-term use to simplify tracking returns and tax reporting.

How Can I Select or Switch Units of Account on Gate?

Go to your account settings or portfolio page—usually found at the top right—where you’ll see options such as "Unit of Account" or "Valuation Currency" supporting choices like USDT, USDC, or CNY. Click to switch instantly. After changing the unit, all portfolio values update accordingly; historical transactions are recalculated using the exchange rate at the time you switch units.