There seems to be an inherent hatred of Bitcoin by certain groups of people. Some people feel the need to boldly declare that Bitcoin isn’t a form of money. Or they declare that Bitcoin is worth $0. This line of thinking tends to come from vehement backers of fiat money. I don’t understand this.
One of the beauties of viewing money as a medium of exchange that exists on a “scale of moneyness” is that it allows you to be more open-minded with regard to how you view the world of financial assets and non-financial assets. There is no need to draw a line in the sand and dogmatically declare that something is money or not money. You don’t have to fall victim to debates like the metallist versus chartalist debates or the gold versus fiat money debates. You can view money for what it is, as a medium of exchange and simply measure how well something serves as a medium of exchange or what its level of “moneyness” is.
Bitcoin is definitely a form of money through this lens because some people view it as a viable medium of exchange. It’s just not a great form of money. But there’s no need to draw a line in the sand here and be dogmatic about Bitcoin.
As for how its “moneyness” might change in the future – who knows? Money is something that is largely in the eye of the beholder. If more and more people believe Bitcoin is a viable medium of exchange then its “moneyness” could actually increase. Likewise, it could decrease. But there’s no need to get involved in an ideological aversion or worship of Bitcoin. I don’t think that will help anyone understand it any better. And it’s certainly not helping in the broader understanding of what “money” is to begin with.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.