Are cryptocurrencies the same as actual currencies?
While the use crypto currencies still have to mature in economies, divided opinions are cast upon governments that are for and against its use.
Cryptocurrency, or sometimes known as digital currency, digital gold, electronic money, etc. has become an acceptable medium of exchange for transactions done through a virtual environment. Similar to the actual money they are utilized to make purchases at retailers, websites, and other some other businesses. In short, they are online money.
Can we consider them as actual money? Do they or do they not satisfy the functions of money? As far as we know, money acts up as a medium of exchange, a unit of account, and a store of value. We draw upon these functions to determine the reasons why cryptocurrencies are becoming more and more acceptable these days.
Electronic money is used to facilitate virtual transactions which otherwise would take time and effort for parties to complete the exchange. So there goes, it doubles up as a medium of exchange. It goes to show that it can somehow function as a unit of account for most digital transactions.
How about being a store of value? As they are used for the payment of goods and services, it gives the holder the probable ability to purchase other forms of assets in the future while it retains its purchasing power.
However, cryptocurrencies are not the same as the actual currencies. For now, they are not standard coins that can be used with all the other exchange transactions that people make. Technically, they should not be treated as such as it is still undergoing an experimental phase where there have to be some reservations in treating it as a standard form of exchange.
Despite the proliferation of e-commerce, online shops, and money transactions, most businesses with online presence do not accept this currency, and of course, actual physical stores are still way out of cryptocurrencies’ league. Paying with it is very limiting.
These so-called Altcoins or Bitcoins are digital forms of currency wherein electricity transforms lines of codes with a corresponding monetary value. Despite its growing public acceptance, we can only rely on the theoretical underpinnings surrounding cryptocurrencies.