Are cryptos medium of exchange or store of value ?
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Cryptocurrencies are depicted as money of the future. Some people are claiming that they will replace fiats. I think it is an exaggerated statement. Are they working like fiats or are just a tool of exchange as done in the barter system? By definition money is anything that can be universally accepted and used by people as a means of exchange of goods, services and resources.
(Source: pixabay.com)
Cryptocurrencies are not fulfilling these conditions. They are not universally accepted because of availability of too many cryptocurrencies and the ban on their transactions in some countries.
Every country allows only a single currency as a medium of exchange within its boundaries. There are 195 countries in the world and just 180 currencies are available worldwide while there are over 3000 cryptocurrencies and token available on internet and their number is growing day by day. So, they are not more than a quick way of becoming rich for many. People are investing on them mainly for the speculation purposes. Some people accept Bitcoin while others accept other cryptos too. But, their widespread acceptance could not be achieved yet. So, they are just being used for storing value with limited exchange capacities.
This doesn’t mean that cryptos cannot be the means of exchange in the future. Many ICOs would not survive in a long run. Only a few workable projects will survive and become the means of exchange. Governments will also issue their own cryptocurrencies. It will hamper the progress of cryptocurrencies as people will accept government issued virtual currencies readily.
Need a good CRYPTOCURRENCY for bitcoin to go to $20000
Good post.
Check out bibocurrency.com, it's a breakdown of what money is and isn't and I haven't ran across a better explanation regarding that. I could point out the circular logic that money/medium of exchange sits on and how logically a unit of measure, regardless of what it measured, cannot fluctuate as it invalidates the very function of a unit of measure and is therefore conversely not a standard of measure. When we talk about crypto, clearly it's as a store of value, yet when we talk about money, it's also and only a store of value, based on how it functions, and how it doesn't.