Skip to main content

Viewpoint: Cryptocurrencies Are Not Money


Did you see that the Bitcoin cryptocurrency traded at $57,000 last Friday, only to fall as low at $28,000 on at least one exchange over the weekend (Dec. 4-5)?

Its price had since partially rebounded, though as of Wednesday evening (Dec. 8), it was only up to about $50,000. This is just the latest example illustrating that cryptocurrencies are not money.

For anything to serve as a medium of exchange and store of value, it must meet several requirements. Among these requirements are that it be:

• Commonly available

• Have little to no cost to hold onto it

• Recognizability

• Transportability

• Consistency of value

• Divisibility

• Difficult to falsify or counterfeit

• Have a relatively high number in circulation

While Bitcoin and other cryptocurrencies may meet many of these requirements, one feature they all lack is consistency in purchasing power. Last weekend’s 50 percent crash was not the only instance of huge volatility in Bitcoin this year. On May 19, that day’s low price was less than 70 percent of the high. The closing price that day was down 34 percent from a week earlier.

This volatility is due, in part, to the extreme leverage that can be used to purchase cryptocurrencies. In testimony before the House Financial Services Subcommittee on Oversight and Investigations on June 30, one witness explained that some traders were able to buy up to 100 times the amount of their own funds in acquiring a cryptocurrency. For instance, by putting in only $10,000 of their own funds, they could borrow another $990,000 to make a $1,000,000 total purchase.

The massive leverage that is possible with Bitcoin and other cryptocurrencies guarantees that they are not suitable as a stable medium of exchange and store of value.

In contrast, the purchasing power of physical gold and silver have remained fairly constant over several thousand years. An ounce of gold could purchase a top-quality men’s toga in Rome 2,000 years ago. Today the same ounce of gold can still purchase a high-end men’s suit.

That is just one reason why physical precious metals have historically served as a medium of exchange without ever failing. In contrast, cryptocurrencies are merely risky, speculative, intangible assets.

Patrick A. Heller was honored as a 2019 FUN Numismatic Ambassador. He is also the recipient of the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award, 2012 Harry Forman National Dealer of the Year Award and 2008 Presidential Award. Over the years, he has also been honored by the Numismatic Literary Guild (including in 2021 for Best Investment Newsletter), Professional Numismatists Guild, Industry Council for Tangible Assets and the Michigan State Numismatic Society. He is the communications officer of Liberty Coin Service in Lansing, Mich., and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at Some of his radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio archives posted at