Functional currency refers to the primary currency used by a business or individual for conducting transactions and measuring financial performance. In the case of cryptocurrency, it denotes the specific digital currency that a user intends to use for everyday operations or investments.For example, if a company regularly receives payments in Bitcoin and reflects these transactions in its financial statements, Bitcoin is considered its functional currency. This designation affects how income, expenses, and financial reports are prepared, as it dictates the currency in which these items are recorded and interpreted.The choice of a functional currency can have implications for conversion rates and market volatility. Users must also consider how fluctuations in the value of their functional currency impact their financial outcomes, especially in a landscape where various cryptocurrencies can exhibit significant price variations.