FUYANG, CHINA – MARCH 13, 2021 – A view of Bitcoin, Fuyang City, Anhui Province, March 13th, … [+] 2021. PHOTOGRAPH BY Costfoto / Barcroft Studios / Future Publishing (Photo credit should be Costfoto / Barcroft Media via Getty Images)

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Cryptocurrencies have had their heyday in January, but that doesn’t mean they’re money.

At least not yet.

In January, the cryptocurrency market reached an important milestone. The market value exceeded $ 1 trillion Bitcoin accounts for more than two thirds of this value.

This market size makes crypto an important asset class alongside stocks, bonds and precious metals.

But it still doesn’t make money in cryptocurrency.

This may surprise some people who keep saying that bitcoin and other cryptos are the future of money. The problem is that none of these Upstart cryptos have all three necessary money attributes.

Yes, money can be anything we choose, but whatever you choose, be it seashells or paper or anything else, it must have all of the following three properties.

Store of value

Money has to be a store of value. That is, it will buy almost the same value of goods and services tomorrow as it does today. If that’s not true, then it’s not money.

We can safely say that Bitcoin does not meet these key criteria. A Bitcoin would almost fetch in mid-March $ 61,700, compared to a current price of around $ 57,350. That is a drop of around 7% within a few days. Imagine if the purchasing power of your savings had decreased by this amount within a few days? You probably want to keep your savings in something more stable.

Medium of exchange

Money has to be a medium of exchange. Or simply put, it has to be the stuff you use to buy goods and services. US dollars are used by people and businesses in the US, sterling in the UK, and euros in the euro area. At least until now, Bitcoin and the other cryptos are not reaching this hurdle because for the vast majority of the world, cryptocurrency is not the way people buy something.

Yes, Elon Musk announced that it will take a while Bitcoin pays for his company’s Tesla electric vehicles

TSLA
. However, the price of a Tesla vehicle is still quoted in US dollars, not bitcoinswhich brings us to the third hurdle.

Unit of account

The final attribute that money must have is that it must be the unit of account. This is how we measure wealth, value and debt. As far as I can see, nobody prepares their business or personal accounts with cryptocurrency as entities.

Instead, people still use the US dollar and other major currencies. In fact, Tesla’s unit of account is dollars. If you have any doubts about me, check out the official company accounts Here.

If money loses one of these three attributes, the other two are likely to go away too. This would probably have happened in the Hong Kong currency crisis of 1983 without the rapid introduction of a peg to the US dollar and the help of the US Federal Reserve.

Currently, Bitcoin and Cryptos do not have any of the three required money attributes. You will need all three, and it will likely take a while for that to happen.