Why cryptocurrencies aren’t money. (yet)
Cryptoland is a strange place. On the one hand is a place where technology pioneers, developers, companies and vibrant communities are working together to develop a new kind of technology with implications in many fronts: the financial system, smart contracts or cybersecurity among others. On the other hand, is a place where honest debates between different projects are rare and many people actions are driven by greed and psychological biases. A great example of this situation is the proliferation of scam artists such as Craigh Right who take advantage of the ignorance of many investors in order to pump their respective coins.
One of the strangest things in this space is how most cryptocurrency projects use the term “money”. For example, if you go to bitcoin.org the first thing you’ll see is: “bitcoin is an innovative payment network and a new kind of money”. This use of the term money is absolutely wrong and a mere marketing slogan. In order to provide some clarity about the topic, I’ll try to explain through this article what money is and why cryptocurrencies aren’t yet money. Only by clearly understanding the nature, functions and characteristics of money, can developers design systems which can be one day the bedrock of a new monetary system, more inclusive, efficient and fairer than the current one.A 640 BC one-third stater electrum coin from Lydia, one of the first official currencies. Image courtesy of https://www.cngcoins.com/
Why is money important?
The origins of money can be traced back to the beginnings of commerce and there is little coincidence in that. Money is a fiction essential for coordination and cooperation in society. The value of money doesn’t come from its physical support but from the collective believe that money has been, is, and will be accepted by everyone as medium of exchange. Thanks to money the price system arises, making possible coordination in today hyper...