Crypto Is (and Isn’t) Money

None of your coins are money and you all have brain damage. “Money” is a sloppy word, but generally it’s used to refer to things that are a general unit of account (like the U.S. dollar) and/or a generally accepted medium of exchange (like a bank deposit).

Ethan Buchman is a co-founder of Cosmos, the CEO of Informal Systems and creator of Cycles.

Money almost never means something that’s just a strong store of value, or that is expected to go up in value generally over time. Of course, storing value is an important function of money, but it’s the only of the three functions that is more widely shared with other things.

There’s way more things that function as a “store of value” than things that function as a “generally accepted unit of account” or a “generally accepted medium of exchange.” That makes being a unit of account or medium of exchange much more specific to money.

Of course there can still be lots of things used as a medium of exchange, giving rise to a notion of “moneyness” based on the general willingness of people to accept a thing for settlement.

So when we’re talking about money, the things that really make it money are its use for exchanging and accounting for value. However, when crypto people talk about money, for some reason they only seem to care about being a store of value — a la bitcoin’s branding as “digital gold.” Ultra-sound deflationary assets and all that nonsense.

At least be honest with yourselves: You’re not talking about money, you’re talking about capital assets. In some cases you invoke a discounted cash flow stream. In some cases you invoke the scarcity or preciousness of cryptographic digital assets. In some cases both.

But you’re usually not talking about money as money is actually used.

To be honest, I’m not sure any of us really know what money is in the 21st century. In crypto, the definition of money has been polluted by people hyper fixating on store of value assets, which is selling our collective future short. Money is about accounting and exchange, not just storing value.

See also: Money Crypto Versus Tech Crypto | Opinion

You could argue all day about whether ETH {{ETH}} or SOL {{SOL}} or ATOM {{ATOM}} is a better store of value without me sneering about money (though I might sneer about other things). But if you really want to talk…