Bitcoin is Both Money and Currency
Parker Lewis recently explored the fundamental difference between money and currency in a detailed analysis, arguing that Bitcoin is uniquely both. While most people don’t differentiate between the two in daily life, this distinction is critical for policy and economic discussions as Bitcoin adoption accelerates.
Bitcoin: A Unique Financial Asset
According to Lewis, Bitcoin is unprecedented in financial history because it is simultaneously a commodity, money, and currency. Unlike gold, which required issuers to transform it into a practical medium of exchange, Bitcoin operates as money and a currency without the need for an issuer.
Historically, currencies required issuers to:
Define and standardize units of measure (such as gold coins or paper money backed by gold).
Ensure the integrity of transactions (via institutions like central banks and governments).
Protect against counterfeit and fraud.
Bitcoin eliminates the need for an issuer entirely by integrating these functions directly into its decentralized protocol. It is a self-sustaining, trustless monetary network.
Key Features That Set Bitcoin Apart
Lewis highlights several unique properties of Bitcoin:
No Central Issuer: Unlike fiat currencies (which require central banks for issuance and validation), Bitcoin is issued algorithmically through mining.
Defined Supply & Unit of Measure: The Bitcoin network enforces its own fixed supply (21 million BTC) and provides an inherent unit of measure (1 BTC, divisible into 100 million satoshis).
Autonomous Transaction Validation: The network validates transactions without intermediaries, ensuring security, transparency, and finality.
Decentralized Enforcement: Bitcoin transactions and supply are governed by code rather than regulatory bodies.
Why This Matters for Policy and Adoption
Bitcoin’s convergence of money and currency has major implications for policymakers and financial institutions:
It removes the traditional role of governments in currency issuance and regulation.
It challenges existing monetary policies that rely on currency manipulation and inflation.
It enables global, peer-to-peer transactions without requiring financial intermediaries.
