Is Cryptocurrency Money?

Is cryptocurrency money? Short answer: yes, but only sorta-kinda. And that wishy-washy answer is why it is worth examining in more depth.

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Good money tends to have a few specific features.

Scarcity

A good money is scarce, meaning it is of limited supply and difficult to inflate. Most cryptocyrrencies have a fixed cap limiting the supply to a maximum total pool. In contrast, governments tend to inflate their currencies as fast as they can without collapsing the economy, and occasionally fail to restrain themselves. Crypto beats fiat here.

Fungibility

Any given units can be mutually substituted for any other. A dollar is a dollar. An ounce of silver is an ounce of silver. A Bitcoin is a Bitcoin. It doesn't matter which dollar/ounce/bitcoin you get, because they are all essentially the same.

In contrast, you would be upset if you brought a deer into a butcher shop during hunting season and were given someone else's deer. It could be a different size, killed inhumanely, improperly field dressed, or otherwise radically different from your own deer. Deer are not very fungible.

Bitcoin is as fungible as fiat, specie, or bullion.

Divisibility

Dollars can be divided into two decimal places, or 100 cents. Steem is currently divisible to three places. Bitcoin is divisible to eight decimal places. 'Nuff said.

Durability

Gold especially is the, well, gold standard for durability. A good money shouldn't rot or corrode. It should be useful as a long-term store of wealth. The blockchain is sound for as long as people continue to maintain the nodes and use the wallets. Sure, a massive collapse of the internet would be bad, but that would kill the dollar and government banking too. And crypto is international.

If a global collapse hits, we have far bigger problems to consider. There is no telling whether gold and silver would have a market either in TEOTWAWKI circumstances.

One other complaint

No crypto is widely accepted, so if widespread acceptance is your primary considaration, crypto isn't there yet. I have personally seen people argue against Crypto because it is not the primary unit of account. Everything, including crypto, is still priced in dollars/pounds/yen/whatever.

Yes, crypto is young technology with a volatile market. Price discovery is a messy process. But the interesting bit is that this individual I remember most clearly offering this "argument" is a gold bug. Wait a moment...

• Gold and silver are priced in dollars.

• The price is volatile, and also represents a significant quantity of paper gold that may not reflect real reserves.

• Almost no one accepts gold or silver directly as a medium of exchange.

Ergo, by the "logic" of the argument presented by the gold bug, crypto is a better money than precious metals.

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So, in conclusion, is crypto money? I supose the answer is still both yes and no. People define "money" by many other means. Legally, it remains in a gray area where governments claim the authority to regulate or outlaw it at a whim. It is not widely accepted despite the growth of its popularity. It is still difficult to use for people accustomed to cash and credit cards. But to argue that it is worthless and a waste of time is as shortsighted as when Paul Krugman (jokingly?) said,

By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's.