Still Don’t Understand Cryptocurrency? Start Here.

Part Three: Is it Money Yet?

The market for Bitcoin and other cryptocurrency isn’t quite as feverish as it was a year ago, when the value of Bitcoin was at all-time highs. But thousands of investors still have an almost fanatical allegiance to crypto, millions more own a bit of it, and a sizeable group of early investors are now extremely wealthy from their crypto investments.

Many millions of others don’t see the point of crypto. What is there to invest in? People don’t invest in the dollar like this—what’s the appeal, and why should it appeal to me? Is it a bona fide currency? These questions, and what I’ll say about them, are two sides of the same coin.

I’ll begin my answer the same way I began this series—by returning to the question of money. Is Bitcoin a currency yet? I don’t think so. Let’s go back to the three criteria of money.

Bitcoin as a medium of exchange

When did you use cryptocurrency to buy anything? Do you plan on using crypto to buy anything in 2026? Do you know anyone who has, or plans to?

In 2025, Visa alone processed about 901 million payments or cash transactions per day, versus Bitcoin’s hundreds of thousands of transactions. So we can’t really say that people are using crypto this way yet.

Bitcoin as a unit of account

If Bitcoin were an accepted unit of account, we’d see goods and services priced in Bitcoin, enough so that we might have an idea how much a common purchase—for example, a gallon of gas—costs in Bitcoin.

Can you name the price of anything in Bitcoin or any other cryptocurrency? Have you ever seen the price of anything quoted in Bitcoin or any other cryptocurrency? For those of you who read the financial news, do you see securities (other than Bitcoin itself) quoted in Bitcoin?

So far, that’s not really happening either.

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Bitcoin as a store of value

This is where crypto comes closest to passing the test. A lot of people own crypto. The value of all Bitcoin held today is about $1.2 trillion. That’s a store of considerable value.

How safe is the store? Not as stable or liquid a store of value as cash. Instead, many people own Bitcoin as an investment—and a speculative one at that.

(In fact, the volatility of Bitcoin led to the development of stablecoins, a kind of cryptocurrency that’s pegged to the dollar, and less volatile as a result. Notice that a hedge against the price volatility of Bitcoin and other pure cryptocurrencies, stablecoins reject much of the anti-institutionalism of Bitcoin.)

Bitcoin is speculative because it’s an investment in the idea, or the hope, that crypto will one day become a currency that passes our three criteria. It’s not the same rationale as investing in bonds, for dependable income and the return of principal, or stocks, for growth that’s based on future earnings.

Others invest in crypto because they believe more and more people will want to own it. They may not care if Bitcoin ever becomes a currency. For them, it’s enough that someone at some near-future time will want to buy their Bitcoin from them at a higher price than they bought it.

As long as crypto is an investment in an idea, it will remain speculative, and therefore volatile and unpredictable, to a greater or lesser degree.

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What Are the Odds?

This is not to dismiss anyone strongly convinced that crypto and its underlying blockchain infrastructure will be a key part of some future financial system. It’s clear to me that the future of finance will include the incredible technological changes happening today and in the future.

What’s less clear to me is exactly how, or even generally how, it will all shake out. And I don’t think very many people can claim to know, either.

For both those who believe in the promise of crypto and those who want in on crypto’s price appreciation, there is no question it can play a role in an investment portfolio—at the small allocations that any speculative investment should have.

Yes, I’ve met people who claim to have done very well with their crypto investments, and have heard second-hand of many more. Curiously, you never hear about people’s crypto losses, although there’ve undoubtedly been some.

But let’s assume the stories are true. There are many, many more people who are very financially comfortable who got that way because they saved and spent wisely and invested their savings in widely available investments.

I prefer those odds.

This is part three of a three-part series. Here are parts one and two.