Cryptocurrency’s Viability as a Currency

Chapter 10 – “Will Cryptocurrency be the Money of the Future?”

Depending on who you ask, cryptocurrencies and their variants like NFTs (non-fungible tokens) have been either a great failure or a great success. For our purposes, we want to assess crypto’s viability as a currency in the context of 2,000 years of the history of money. 

So, let’s see if cryptocurrency meets the three different criteria to make a currency viable. 

  1. It needs to hold value,
  2. it has to be a generally agreed upon medium of exchange,
  3. it has to be easy to use, handle, and exchange.

For Nakamoto, bitcoin theoretically met all those criteria. 


Does crypto hold value? The value of bitcoin is high but it varies a lot. In a week its value can change by thousands of dollars and between April and July of 2022 the value of crypto worldwide dropped 56%. There are so-called stable coins which are designed to have less variation in value. The coin Terra, for example, was designed to be tied one-to-one with the US dollar. But in the first half of 2022, people lost faith that the value was actually pegged to real dollars and the value started to drop. It is now worth a fraction of a penny. A person who does not have a lot of money would not want to put a lot of their US dollars in bitcoin because it could be worth a lot less when you need to use it to buy something. 

Is crypto a generally agreed upon medium of exchange? For the most part no. You can buy some online items using it, but you can’t buy groceries with it and you can’t pay your bills with it. Importantly, you can’t pay taxes with it. If you remember, what has often given people faith in fiat currency was the ability to pay taxes. 

Is crypto easy to use? Nakamoto designed bitcoin specifically to be easy to use and handle. In practice, that is not the case yet. Few people have the technical skills to set up an account to mine coins or access them independently

Most people who use crypto use a coin wallet, a company that creates a user-friendly way to access and use crypto. But this means that the coins aren’t decentralized and they are more susceptible to fraud. 

A recent report by the US government showed that coins managed by coin wallets can easily be hacked and both individuals and countries are vulnerable. 

Finally, this decentralized mode of moving information isn’t very efficient. The bitcoin infrastructure can only perform three to seven transactions per second. That might sound like a lot but the Visa Credit Card company processes 24,000 transactions per second!

So generally crypto doesn’t meet the standards of a viable currency. But what’s wrong with having this new type of payment? Well, the first problem is the power usage. Crypto was designed to use a lot of computer power and computers require electricity. 

The amount of electricity required to process the blockchain for bitcoin is tremendous, perhaps as much as 0.3% of global electricity use annually. That is more electricity than the country of Belgium uses! Much of that is coal powered electricity which means bitcoin produces a lot of pollution. If the currency is not usable, what is the purpose of adding to the pollution level?

The other problem with crypto is the lack of regulation. In the US, investments are regulated by the Securities and Exchange Commission but they have been slow to regulate crypto. A lot of people are putting money into different coins, only for their dollar value to quickly evaporate. 

There is no way to get that money back when those who create the coins fail to follow through on the promises made to investors. For example, the crypto- currency Tether, which is backed by the company’s assets and reserves, was recently caught lying about the cash reserves it had backing its coin. 

Other groups have created coins, hyped them up through publicity on social media to give people faith, only to have founders and promoters cash out in real dollars when the price was high. This is called a pump-and-dump scam and it has been illegal for a long time in the stock market but not necessarily in crypto. Some of these coins are not even real.

Mysterious groups have claimed to make new coins, and accepted payment for them, but the coin never goes online, or it goes online for a short period of time and then the creators disappear. The OneCoin was structured as a classical pyramid scheme, with the top 1-5% of investors making money by drawing others into the scheme. 

The founder Ruja Ignatova, the so-called “CryptoQueen,” is currently on the FBI’s Ten most Wanted Fugitive list with a $100,000 reward for information on her whereabouts. The OneCoin story is surprisingly similar to the wildcat banks of the 1800s which ruined the lives of many Americans.

“Will Cryptocurrency be the Money of the Future?”

A Journey to Personal Financial Success

At Morgan Franklin Fellowship (MFF), we support the concept of financial freedom – by teaching participants how to save by paying themselves first, invest for their future and grow their net worth.

Learning how money works and how to talk about money with others are the first steps towards recognizing an individual’s lifelong financial goals. Our online programs, podcasts, blogs, and book reviews and resources are designed to help you learn the concepts, rules and vocabulary of money, finance and investing.

Becoming an MFF Fellow

Our Standards of Financial LiteracyLearning about money series is engaging, full of interesting information, and easy to navigate. Adapted from the National Standards for Personal Financial Education developed by the Council for Economic Education (CEE), this robust curriculum features six short lessons on such important topics as earning income, understanding the value of saving and using credit. When completed, this program lays the foundation for becoming an MFF Fellow.

Becoming an MFF Fellow is the ticket to access additional MFF programs and opportunities for mentoring, networking, internships and real-world opportunities. Hear from the MFF Fellow themselves on how these opportunities encourage them to continue their journey to personal financial success.

Learn More about Money

Begin the journey towards personal financial independence today. START LEARNING TODAY

Interested in learning more about cryptocurrency? Order your free copy of MFF’s full e-book “Will Cryptocurrency be the Money of the Future? – Learning from the Past” written by Dr. Jason L. Newton. Jason is an alumni member of the Morgan Franklin Fellowship Foundation class of 2022. To receive your free copy take a moment to __XYZ___.

A Journey to Personal Financial Success

At Morgan Franklin Fellowship (MFF), we support the concept of financial freedom – by teaching participants how to save by paying themselves first, invest for their future and grow their net worth.

Learning how money works and how to talk about money with others are the first steps towards recognizing an individual’s lifelong financial goals. Our online programs, podcasts, blogs, and book reviews and resources are designed to help you learn the concepts, rules and vocabulary of money, finance and investing.

Becoming an MFF Fellow

Our Standards of Financial LiteracyLearning about money series is engaging, full of interesting information, and easy to navigate. Adapted from the National Standards for Personal Financial Education developed by the Council for Economic Education (CEE), this robust curriculum features six short lessons on such important topics as earning income, understanding the value of saving and using credit. When completed, this program lays the foundation for becoming an MFF Fellow.

Becoming an MFF Fellow is the ticket to access additional MFF programs and opportunities for mentoring, networking, internships and real-world opportunities. Hear from the MFF Fellow themselves on how these opportunities encourage them to continue their journey to personal financial success.

Learn More about Money

Begin the journey towards personal financial independence today. START LEARNING TODAY

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