We all know what money is. After all it dictates almost every activity on earth. It has taken many forms, from cowry shells and beads to precious metals, coins and notes that we know today.
We often think of money as cash, but cash long ago gave way to digital money, in fact money in bank accounts makes up 97% of all money in circulation.
Now there is a new kid on the block. Cryptocurrencies or crypto for short. Bitcoin is everywhere right now, and while bitcoin is by far the most important cryptocurrency, there were in fact over 1,320 cryptocurrencies as of Dec. 1, all of them tradable with their own individual value.
But does calling something a currency make it money? Technically money is any clearly identifiable object of value that is generally accepted as payment. In other words, if a big enough group of people say they are willing to exchange goods and services in exchange for an item then that item is in fact money.
Many of the new cryptocurrencies are intended purely for use within a defined marketplace; think loyalty programs or the currencies of an online gaming site, but many, such as bitcoin, Etherium, Dash, ZCash to name but a few, want us to start to use these currencies as we use money today, just better, cheaper, faster and more reliable. So can I buy a coffee with any of these new crypto. Can I pay for my mortgage with a bitcoin. Almost certainly not. Try to pay for a coffee in Starbucks with Dash and you will get a blank stare.
But this is all about to change. Innovative companies are working on ways to instantaneously convert your cryptocurrency into the currency issued by the merchant. Now when you go to Starbucks, you might be charged in dollars, but provided you have the right payment app, you can pay in cryptocurrency, and Crypterium for example, will instantaneously convert that cryptocurrency into dollars.
Does this make it money? Probably not, since only one side of the bargain is actually working with crypto, while the other side still wants their dollars. But it is definitely a start. If people realize then can spend crypto, they will be more willing to own it. The more they own, the more they spend, and the merchant eventually realizes that perhaps they don’t need to convert to dollars after all. Once the idea takes hold, it seems almost inevitable that that crypto will not be just a currency, but also money.