The debate about the nature of cryptos continues to generate heated debate. Are they crypto-currencies or crypto-assets?
The 3 functions of money are a unit of account, that allows measurement of the relative value of very diverse goods, an instrument of payment that allows acquisition of any other good in exchange, and a reserve of value of value that allows storage of one’s wealth.
Currency or asset class? From a legal point of view, bitcoin — for which there is no central control point such as a central bank — is not a currency. Moreover, the high volatility of bitcoin would prevent it from fulfilling the three functions that a currency should cover.
It is therefore more of a crypto-asset than a crypto-currency, and so the G20 considers bitcoin to be a crypto-asset.
The term “crypto-asset” refers to virtual assets that are stored in an electronic format that allows a community of users to accept them in payment, which facilitates transactions without having to resort to legal currency.
Although advocates of considering crypto as a currency point out the independence of crypto from the supervision of states, the opponents note that crypto currency can thus not be considered as a true monetary system, or at least not a solid one.
So, is crypto a currency or an asset? The question remains open even if the balance is leaning towards the crypto-asset…