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The Three Main Hurdles for Cryptocurrencies Becoming Money

  1. Store of Value: This is the expectation that my money will be able to buy roughly the same amount of goods and services in the future i.e. that it retains its purchasing power.
  2. Medium of Exchange: Money can be used to facilitate trade between two parties. Without money as a medium of exchange people would have to trade an exact amount of goods for another exact amount of goods, requiring what economists call “a double coincidence of wants”.
  3. Unit of Account: This refers to the fact that we can have a numerical yardstick by using money. For instance, we price everything in terms of £s (or whatever other currency), this includes goods, services, company accounts and debts. Money is the unit that we use in our economies.
  1. Volatility
  2. Scalability
  3. Competing against incumbent money’s network effects

1. The Volatility Hurdle

What are solutions to this volatility issue?

Bitcoin 30 day volatility, Source:https://bitvol.info
Source: Coinmarketcap.com

2. The Scalability Hurdle

Source: BIS — “Cryptocurrencies: Looking Beyond the Hype”

3. Competing against the Network Effects of Incumbent Money

Conclusion

References

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Elijah McClain, George Floyd, Eric Garner, Breonna Taylor, Ahmaud Arbery, Michael Brown, Oscar Grant, Atatiana Jefferson, Tamir Rice, Bettie Jones, Botham Jean

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