Shahid Nadeem, Erick Peinert and Matt Stoller

How Are Cryptocurrencies Different from Currencies or Traditional Securities?

Most currencies are managed by a central bank to ensure that they serve as a stable means of exchange. Without a central bank to manage them and ensure a stable value, cryptocurrencies do not serve as a meaningful store of value like the U.S. dollar does. In addition, with an influx of speculative investors over the past 10 years, the price of individual cryptocurrencies can skyrocket or decline in value overnight, making them nearly useless as a means of exchange, which is the traditional function of a currency. This means that despite early claims that cryptocurrencies would serve as functional currency or a means of payment, almost all crypto assets are instead used as a means of speculative investment — in other words, largely unlicensed securities.