The Three Forms of Money

At my company, Athena Bitcoin, we spend a lot of time thinking about and dealing with money in different forms. We obviously deal with digital or crypto forms of money like Bitcoin and Litecoin on a daily basis, as these are the primary crypto currencies we sell on our Bitcoin ATM. We also deal with physical money, aka cash. And we differentiate cash from electronic money or bank deposits. Sometimes when I explain what Athena Bitcoin does I’m asked “way isn’t that an app?” The short answer is that you can’t put a dollar bill into your phone. This is the Medium answer.

We don’t equate cash to electronic money because each form has different properties, especially when transferred. Some of these transfer-properties become critically important for us when we are exchanging crypto currency for sovereign or fiat money, like US Dollars, Colombian Pesos, or Argentine Pesos. Only one form of sovereign money is similar enough to crypto money for our purposes — physical cash.


The first difference between forms of money is how permanent a transfer is and whether it can be reversed. If I give you a $100 bill, that is a permanent transfer so long as you can run faster than me or have a big friend. This doesn’t mean that you can’t give me the money back, but I can’t just magically take it from your pocket. Also I can’t have an independent authority (government) take it from you without proving my case in a court of law.

Bitcoin is an amazing invention partly because it is the first digital currency which has permanent transfers. Once a transaction has been broadcast to and confirmed by the network it is recorded forever on the Blockchain. You could still be compelled to return my bitcoin by a government but there is no magic way for me to take it back.

Electronic money has only a few mechanisms for permanent transfer. Usually we think of all of the amazing mechanisms for transferring electronic money as highly convenient, like Venmo, PayPal, and Chase Quick Pay. They are convenient, but if you “make a mistake” there is someone who can “help”. I put those activities in quotes because they could be subject to different interpretations by each of the participants to a transfer. If I Venmo you $1001.00 but wanted to send you $100.10, I know I could probably call someone and get the amount changed — and that person will not be a court judge. Similarly if I charged something on my credit card, there is a lengthy period for me to review and dispute charges. Electronic money is very convenient and safe for consumers. It just isn’t permanent.

There are permanent forms of electronic money transfer in the US. Wire transfers become permanent after 24-hours. There are a variety of account types where this is not the case, but the longest time it takes is one day. All other forms of electronic money transfer in the US do not become permanent for months.


The second difference between different forms of money is how fast their transfers are recorded and information can be disseminated. Cash or physical money takes seconds to transfer if both parties are collocated. You or your bill accepting device can take, verify, and record a bill transfer in seconds. I was recently in Hong Kong and even there I was able to quickly accept the change from my taxi ride. Cash is great that way.

Bitcoin may have scaling issues, but the vast majority of transactions have been broadcast and confirmed within 10-minutes and often less. That’s almost as fast as cash, not quite, but good for many applications. And even if confirmation times extend, Bitcoin transactions should be visible on the network almost immediately.

There are many forms of electronic money transfer that are immediate including most of the new FinTech services like PayPal, Venmo, and the bank services like Chase Quick Pay. Credit card transactions take only seconds to authorize. ACH can often be done in a day as can wire transfers. We have had domestic wires confirmed in as little as an hour and as long as a day and a half.

Overlapping Properties

The two properties of money transfer that are the most important to us are permanence and immediacy. Bitcoin transactions are both. The only other form of money that has a transfer mechanism that is permanent and immediate is physical currency.

In a transaction where one party is to immediately receive crypto currency, and take actual delivery to their own wallet, there is only one other form of money that can be exchanged with similar properties. Wire transfers of electronic money are reliable but they can take hours and carry some, although limited, risk of reversal.

Until we have a form of electronic money transfer that is immediate and permanent people who want immediate access to Bitcoin and crypto currency will need to pay with cash. And in fact I’d propose that if there was an immediate, inexpensive, permanent, and uncensorable transfer mechanism for dollars there would be a lot less demand for Bitcoin.