But are cryptocurrencies too volatile to be used as legal tender?
When cryptocurrencies like Bitcoin first became a thing, there were plenty of people who predicted they would become a new-and-improved replacement to the regular money we currently use in our day-to-day lives. That's because cryptocurrencies have several unique properties. Perhaps the biggest one is that they’re usually decentralised, which means they can’t be controlled by governments or other state entities like central banks.
This is in contrast to the money we currently use (official term: fiat currency) which is created, authorised and heavily influenced by the state. This allows the state to do things that may be disliked or be harmful to some of the people who own some of the fiat currency.
Governments can impose capital controls, which stop people taking their money out of a certain area (usually the country). They can also impose regulation on what people can and can’t buy with that money (no illegal drugs, for example). And governments and central banks can also deliberately or unintentionally affect how much ‘purchasing power’ money has (how much stuff you can get with it) because they have a hand in things like currency devaluation (changing the exchange rate) and the inflation rate (how quickly prices go up).
Of course, not everyone agrees that the state imposing rules and regulations on fiat currencies is a bad thing. And being state-backed also helps keep fiat currencies stable. Generally, people will only be happy to swap money for a good or service if they have faith that the value of that money will not change anytime soon. With fiat currencies, governments and central banks are essentially acting as guarantors of this, because they can - and almost certainly will - step in if prices start to go haywire.
…and who’s getting the bill for all this? Money is such a core part of the economy, and a lot of economic power lies in the hands of those who print it, earn it, and spend it. But money’s not just as a tool for exchange; it’s taken on a value in itself, and there’s a whole economy around money alone…