Should Cryptocurrencies actually be Cryptomoney? An Economist's perspective

 What is the difference between Currency and Money?

For most of us, the words 'Currency' and 'Money' mean the same thing, i.e. a medium of exchanging goods or services. But in reality these two are completely different concepts. Money is a far more valuable entity than Currency. A currency has unlimited supply, is controlled by Governments, can be manipulated, and face inflation/deflation. None of these characteristics apply to top performing digital assets like Bitcoin and Ethereum that have a limited supply and de-centralized network of operations. 

In premodern era, valuables like Gold and Silver were a common mean of exchanging goods or services. However, as the time progressed and we the people became more mobile, it became increasingly challenging to transport Gold and Silver to far away places for the purpose of trade. Therefore, the authorities started to issue 'Banknotes' backed up by actual Gold. In fact, until 1971 you could convert your US Dollar to Gold at the fixed price of $35 per ounce. Why was there a need to backup banknotes with Gold you ask? Because Gold is money that remains valuable for ever and banknotes are currency that are just a government issued item!

Demonetization in India in 2016

On 8th of November 2016, the Government of India declared that they are 'demonetizing' all ₹500 (US$7.80) and ₹1,000 (US$16) banknotes that people have and everyone is required to exchanges their existing banknotes with the new ones as keeping the older banknotes had became a crime overnight. India is a country where over 90% of the transactions are conducted using hard currency of which these  ₹500 (US$7.80) and ₹1,000 (US$16) banknotes constituted about 80% of the currency in circulation. This 'demonetization' caused millions of people strangled in lines over the next 6 months to exchange their hard earned money which otherwise would be invalidated if not replaced by December 31st 2016. Per one report, over 100 people had died as a result of so called 'demonetization' in India. 

Now imagine if someone had all of their wealth in Gold or Silver instead of the banknotes of ₹500 (US$7.80) and ₹1,000 (US$16). This person would have been unaffected by the 'demonetization' policy as they were carrying actual money rather than a government issued currency. So was it really demonetization or was it actually  decurrencitzation? I would argue it was latter because for people holding real money in the form of Gold or Silver, nothing changed. 

Should we re-name Cryptocurrencies to Cryptomoney?

One other interesting thing happened in India after demonetization. BITCOIN was selling at a 300% premium in India in the following days. Why? Because Like Gold and Silver, crypto-assets like Bitcoin and Ethereum are also REAL money and not currencies. Cryptoassets have an intrinsic value, a limited supply, are decentralized and hence can't be manipulated. In fact, the origin of Bitcoin was after the 2007-08 crash when people felt need of an alternate financial system that is more stable and honest. 

Therefore, I am making the bold proposal of re-naming Cryptocurrencies to Cryptomoney so that we can unleash the real power of our loved cryptoassets. Add your comments below to share what you think!