Let's discuss money! We all use it. We pay cash, tap cards, transfer money online, and save for the future. But we rarely stop to ask: What makes money work?
When Bitcoin was launched in 2009, it promised to be the "future of money." It's advocates claimed it would replace banks, credit cards, and government currencies.
Fifteen years later, that promise has collapsed. Bitcoin hasn't replaced the dollar or any national currency. Instead, it has become more like a speculative gambling chip.
Why? It’s not just because of "volatility." For something to function as money in a modern economy, it must perform six essential jobs, and this article will prove you that Bitcoin fails at every single one of them.
Job 1: Store Value (The "Savings" Test)
The Job:
If you put your life savings into money today, you need to be confident it will buy roughly the same amount (or more) of food and shelter over the next years.
Bitcoin’s Failure:
Bitcoin is not a store of value; it is a chaos engine. Its price can drop over 50% in days, then double, then crash again.
Imagine saving for your child's university tuition in Bitcoin. You might have enough for a full degree in January, but by March, you can only afford textbooks. That isn't savings; it's roulette.
Job 2: Enable Payments (The "Coffee" Test)
The Job:
You should be able to buy bread, pay a bill, or send money to family instantly and cheaply.
Success:
Speed:
- The Bitcoin Layer 1 network processes around 7 transactions per second.
- Layer 2 solutions, like the Lightning Network, have successfully resolved this issue.
Cost:
- Layer 1: During busy periods, transaction fees have spiked to $50. Imagine paying a $50 fee to buy $5 worth of coffee. And under normal operations, this fees ranges between $0.30 to $0.8. USDT transactions used to cost over $1 per transaction on average.
- Layer 2 solutions have solved this problem too, reducing average transaction costs to less than a cent. These days, since USDT is on the Lightning Network, these fees have dropped to less than a cent.
In contrast, transactions done via India's UPI, Kenya's M-Pesa, Europe's SEPA Instant, Brazil's PIX, etc., are generally free for users. However, no cryptocurrency can ever offer free transactions to users.
Decentralization always comes with a cost.
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Job 3: Provide Credit (The "Growth" Test)
The Job:
This is the engine of the economy. Farmers borrow for seeds and repay after harvest. Families borrow for homes and pay over 30 years. Businesses borrow to expand and hire and pay as they earn.
Crypto's Failure:
This is the most critical and overlooked failure of all cryptocurrencies, not just Bitcoin. There is no credit mechanism in crypto. For example, you cannot borrow a Bitcoin that hasn't been mined yet.
At most, you can borrow one cryptocurrency by paying a significantly higher collateral in a different cryptocurrency. That doesn't really count as credit, it's just a trade deal, and that too a risky one because of unstable prices.
Without credit, you cannot have mortgages, business loans, or economic growth. A "Crypto economy" would be a stagnant, medieval economy where you can only spend what you currently own.
Job 4: Maintain Stability (The "Planning" Test)
The Job:
Prices need to be predictable. Businesses need to know what their costs will be next month.
Bitcoin’s Failure:
Imagine if a loaf of bread cost $3 on Monday, $5 on Tuesday, and $2.5 on Wednesday. How would a bakery plan its flour orders? How would you budget for rent?
Because Bitcoin swings wildly, no business can actually price goods in it. Most "crypto-friendly" businesses price their goods in dollars and convert your Bitcoin to dollars (or a stablecoin) instantly after you pay.
Job 5: Prevent Crime (The "Safety" Test)
The Job:
A financial system must protect legitimate users by preventing theft, fraud, and laundering.
Crypto's Failure:
Bitcoin is the currency of choice for criminal activities, though Ethereum and privacy-focused cryptocurrencies have also been used. Cryptocurrencies have enabled industrial-scale crime, from the Colonial Pipeline hack to billion-dollar criminal activities. They've failed to protect the innocent, and have instead empowered criminals.
Job 6: Resolve Disputes (The "Human" Test)
The Job:
Humans make mistakes. You send money to the wrong person. You pay for goods that never arrive. A fraudster steals your card info.
Crypto's Failure:
Traditional finance has chargebacks, courts, and systems for fraud protection. Cryptocurrencies have zero recourse.
Sent money to the wrong address? Gone forever.
Hacked? Gone forever.
Scammed? Gone forever.
The "code is law" philosophy means there is no room for human judgment, mercy, or justice.
The Verdict
Stablecoins score at most three out of six, and that's if they don't collapse like TerraUSD (UST).
Bitcoin and other cryptocurrencies score a one out of six, only because the Layer solutions have enabled faster and cheaper payments for Bitcoin and USDT.
They are worse at storing value, worse at payments, incapable of credit, unstable, friendly to crime, and unforgiving of mistakes.
The only thing they do better than the banking system is evade government control—and even that is failing as governments are increasing using blockchain analysis and tracking to seize billions from criminals.
Don't confuse a "high price" with "functional money." Tulip bulbs once cost as much as a house; that didn't make them a good currency.
I'm sure you have something to add. Please let me know in the comments.
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