How did it come to pass that this new asset class became known as currencies? Doesn’t a currency need to be generally accepted for use in at least a certain geographical zone or jurisdiction and is it not usually governed by a central bank.
What are the traits of cryptos? I will not dive into the details of the block-chain technology and the differences between the various different versions (Bitcoin, Ethereum, Ripple among the others). A non-expert view.
Cryptos need to be “mined”. It takes a time and machine effort solve the mathematical puzzle that increases in difficulty each time one is solved.
There is a limit to the number that can be mined The increasing difficulty creates a limit in the number, 21million is the limit defined originally by the creator Satoshi (Is that really a limit or could that change? Who knows).
The cryptography and anonymity has given a value to these mined items.
People can use them to pay for things… sometimes… if the two partners agree. There is no legally binding reason for cryptos to be accepted for payment except for a contract between two parties.
The underlying value of these assets changes, a lot.
I have to feel that there is no reason whatsoever for this nomenclature “currencies” to be used relating to these assets. This is distracting to the general public, and frankly dangerous. These, to me, are commodities. Like any other commodity, metals like platinum and gold, or like oil. Gold has always had the particularity that when it is melted down and used for something else it still remains gold and for that reason holds special place in currency and commodity history as a standard. Oil can be consumed and is needed as an energy source for many things. What about cryptos? The block-chain techology will no doubt be used around the world in cryptography and security, but what will be the place for cyrpto-commodities in history?
At some point will the fact that a Crypto contains code mean that ones a few people have possessed that particular “coin” that they could extract and copy it? Not today, but nothing in life stays still.
Commodity prices are inherently volatile and commodities can be replaced.
Caveat et emptor venditor. Buyer and seller beware!