The views and opinions expressed in this article are correct, which are the author’s personal views. Electronic money and cryptocurrencies, especially Bitcoin, have re-entered public consciousness. Bitcoin has just been legalized in Ukraine and has become a legal currency in places like El Salvador. The question is, is cryptocurrency even considered currency or “money”? Money is a legal system, although economists and more and more lawyers usually do not know this.

Detailed exploration of the legal and monetary system

The currency in the current monetary system is a legal debt generated through borrowing and lending. In addition, it applies in a true sense to the more important bank currency, that is, the currency stored in a commercial bank account, which is much more important economically. Although this legal authorization is imprecise and implicit in the case of bank currency, it exists in the case of other types of cash.

Bank funds generated by issuing loans to bank customers through the use of personal loan agreements or the use of credit cards as collateral. The seller can then use the obtained funds to make another purchase with the remaining proceeds. In contrast, the logo of Bitcoin is precisely to remove the identity of the bank as an intermediary, aiming to provide Bitcoin users with an image of anarchism and independence. The good news today is that the price of Bitcoin is rising every day.access Bitcoin Superstar .

By repaying the loan in full, the bank customer is technically destroying money because he is repaying the debt represented by the money-not only the amount he used to buy the car, but also a symbol of money in a broader macroeconomic sense Obligations. Legally speaking, the buyer repays the purchase debt through a second loan. The law states that this constitutes a payment. If the customer takes out all the money in the account to receive cash, the bank’s obligation to him will return, and the bank’s money will become currency in the process.

What constitutes currency, and who has the right to produce currency?

What matters is what currency is and who has the right to produce and issue it in the first place. This is required by law. In theory, commercial banks can symbolize their circulating credit as currency by issuing banknotes. This situation lasted until the 19th century and was eventually prohibited by law (except for Scotland, for example).

Commercial banks are allowed to create (and hold) electronic banking currency, which legally treats it as bank currency. Another practical problem is that customers must distinguish between a bank card or credit card (bank currency) and a cash card, so the two are likely to be highly similar plastic cards.

Cryptocurrency cannot perform the basic functions of currency

On the other hand, the difference between traditional forms of currency and Bitcoin is that traditional forms of currency are generated and issued by legally authorized banks. At the same time, Bitcoin is created and issued by individuals. Although this legal authorization is imprecise and implicit in the case of bank currency, it exists in the case of other types of cash. In contrast, the logo of Bitcoin is precisely to remove the identity of the bank as an intermediary, aiming to provide Bitcoin users with an image of anarchism and independence. Because today’s traditional currency no longer has any intrinsic value (as opposed to gold), its value comes only from the recipient’s belief that they will exchange currencies that are not valuable at all for use-value items in the future.

Although this feature is similar to Bitcoin, it is more common. However, because Bitcoin is a completely unregulated payment method, its exchange value or confidence is uncertain and dangerous, making it seem unacceptable as a medium of trade. Therefore, at this point, it is mainly a subject of conjecture. Traditional currencies can also be used as a store of value (as seen in foreign currency speculation), but this is different from the scale of the dramatic price fluctuations experienced by Bitcoin, which makes it impossible to use it as a store of value.