Is Cryptocurrency Real Money?

Bitcoin and cryptocurrencies, in general, were once the subject of ridicule by economists and banking institutions around the world. But over the last few years, we’ve collectively seen just how valuable and versatile cryptocurrencies are. In turn, we’ve also seen more businesses and individuals start to use crypto tokens to pay for everyday goods or investments.

But even with these changes, is cryptocurrency real money? Is it a good investment, and should merchants start accepting crypto tokens at their businesses? Today, let’s answer these questions and more, beginning with a historical overview of money and the rise of fiat currencies.

What Is “Real” Money?

Opponents of cryptocurrencies will sometimes claim that digital tokens like Bitcoin or Ethereum aren’t “real.” But what exactly does it mean to have real money?

Remember, currency is just a concept humans invented to facilitate smoother trade.

The History of Currency

In ancient human history, trade would occur between two individuals when they both had something the other wanted. For example, maybe one farmer had milk, and another farmer had barley. The farmers would trade the items directly.

However, society was unable to grow with such a barter system method of economics. Instead, people had to develop a universal currency that everyone could share and accept in society.

In this way, a farmer who didn’t have milk could still get barley from another farmer if they needed it if they had some universal, shared currency. This exchange gradually led to banks, investments, and other modern economic concepts.

Over history, shared currencies typically took the form of precious metals like gold, silver, and bronze. Other items like stones, shells, and similar objects took the place of precious metals in different societies. These currencies were valuable in part because of their scarcity.

For example, gold used to be very difficult to mine and was prized because of its appearance. The US dollar was initially backed by a gold standard, meaning you could theoretically visit a bank and withdraw your dollar’s value in raw gold. That changed in the 70s when the US dollar became fiat rather than backed by anything of physical value.

Before cryptocurrencies, the latest evolution in currency was fiat currency: banknotes that were backed by at least one national government. The most straightforward example is the US dollar.

When you hand someone a dollar to make a purchase, you don’t give them anything of value. Instead, you hand that person a banknote that says the dollar is valuable because the US federal bank backs its worth. You can rest assured that the dollar will be valuable throughout the US in perpetuity.

Is Fiat Currency Real?

Cryptocurrency supporters can probably see the point already: fiat currency itself isn’t based on any real thing or value. It’s only valuable because we say it’s valuable. If the US government were to disappear tomorrow, the US dollar would similarly lose its value since it isn’t “real” and has no practical value or application.

Cryptocurrencies can count as “real” money if enough people adopt crypto tokens and start using them for trade. Yes, this does mean that anything can count as real money. The trick is to get enough people to adopt a given currency before it reaches a critical economic mass and becomes accepted everywhere else.

So, What Is Cryptocurrency?

Cryptocurrency is a digital currency with no real-world equivalent or coin. Unlike the dollar, which you can hold in your hand, no one can physically hold Bitcoin and other crypto tokens.

Instead, you store crypto tokens on electronic wallets to prevent digital wealth hacking or theft. Cryptocurrencies are recorded on blockchains: long digital records that are publicly sourced and verified to avoid fraud on a large scale.

In some ways, it may be easy to think of cryptocurrencies as casino chips, arcade tokens, and other forms of currencies you can’t necessarily use at your local grocery store. Furthermore, cryptocurrencies need to be purchased using fiat currencies or other crypto tokens in this day and age.

That may change; cryptocurrency is not yet widely accepted enough to be purchased through other means, partially due to how new cryptocurrencies enter circulation.

Most cryptocurrencies enter circulation through a mining and minting process in which “miners” solve complex cryptographic algorithms every so often. Some crypto tokens, like Bitcoin, have a hard limit on how many coins will ever enter circulation. Others, like Dogecoin, are potentially less valuable because they have no such limitations.

What’s the Value of Cryptocurrency?

The value of cryptocurrency is whatever its users say it is! More specifically, cryptocurrencies gain their value through widespread public acceptance and adoption.

Think about it. If your Bitcoin allows you to purchase a car, Bitcoin must be valuable enough for the car dealer to exchange a working, real-world vehicle for a digital token. Therefore, cryptocurrency has the same theoretical value as any fiat currency like the dollar, euro, or yen.

The value of cryptocurrency is always going up, as well. This increase is partially due to speculation as people continue to purchase Bitcoin and other crypto tokens to get rich quickly. But cryptocurrency’s core value is derived from two primary elements:

  • Major crypto tokens are decentralized by design, meaning that one bank or institution cannot control the entire wealth of a given crypto token
  • Cryptocurrencies are secure ways to keep wealth compared to physical dollars or other assets like gold. Crypto wallets are almost impossible to hack, and crypto transactions are practically impossible to fake, meaning cryptocurrency economies are the safest and most scam-free ever made.

As you can see, cryptocurrencies have several precious aspects that fiat currencies can’t claim. While it’s still possible for crypto tokens to become overly centralized or hoarded by a select group of people, it’s much less likely than what we already see in the fiat currency economy.

In all likelihood, the value of cryptocurrency will go up shortly as more and more people lean into these distinct advantages.

Will Cryptocurrencies Replace Other Currencies?

Because of the above benefits, cryptocurrencies might replace other currencies over time. For example, cryptocurrencies and blockchain technologies are of particular use for:

  • Sending currency instantaneously around the world without fees or barriers
  • Verifying transactions using smart contracts and similar technologies
  • Verifying votes and facilitating secure voting processes

Suffice it to say that crypto technology is rapidly growing worldwide and becoming more popular. As crypto technology becomes more popular, people will start to accumulate crypto tokens and try to use them at their favorite retailers or online stores.

While it’s unlikely that cryptocurrencies will ever fully replace fiat currencies, they will undoubtedly become a major and accepted form of tender soon. We expect most serious merchants to eventually accept both cryptocurrencies and fiat currencies in equal measure sooner or later.

Should Merchants Accept Crypto Tokens?

If the merchant in question wishes to stay ahead of the curve, yes! Cryptocurrency acceptance is a great business strategy for a few key reasons:

  • It means that you’ll be well prepared and ready to go whenever cryptocurrencies become more popular.
  • It means you offer your customers more ways to pay for your services or goods. As many studies have shown, merchants that provide more ways to pay usually have greater profits since they turn away less business than merchants that only have one or two ways to pay.

Cryptocurrency acceptance means you can sell your stuff to anyone and transfer their cryptocurrency into another coin or fiat currency. When you accept crypto tokens, you grant your business additional commercial flexibility all around.


Cryptocurrency is real money in the same way that fiat currency is real money. The only difference between Bitcoin and the dollar is that Bitcoin isn’t quite fully accepted by the broader population just yet. But that will eventually change, and platforms like CoinPayments are looking to help merchants just like you be ready for the economic shift ahead.

That’s why CoinPayments offers dedicated merchant tools, crypto payment gateway services, and much more. Contact us today for more information or sign up for a cryptocurrency wallet from CoinPayments to get started on the path to accepting crypto tokens at your eCommerce business.

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