The origin of money has always been as the most marketable (e.g. most stable in demand and constant in value or price) good or commodity in the market before its use as a money [1]. A commodity is a type of good the businessmen or middlemen hold in “readiness for sale.” [2] This means that for a thing to become a money, it must already be a good or commodity.

Mises notes that monies of each nation or region lost out to other monies such that the choices for money were contracted over time. This was based on marketability of each good. This allows for even greater divisions of labor between those using the expanded territory of the money, economic integration between those said nations or regions, and economic calculation, as the one good is now used as money by more. The mechanism described is the tendency towards one universally marketable money. This tendency means that for a new money to take over, it must be some good that is more marketable than what is being used as money, such as gold.

Once a good is decided as a money, it becomes even more marketable and thus any new money will have to be even more marketable in order to replace this money. This makes it more difficult for new monies to be adopted over an established money.

Cryptocurrency is not a good or commodity in the market outside of its use as a money; therefore, it will not naturally become a money. Cryptocurrency proponents argue that money is necessarily unstable upon the start, but then the moneys of history would not have been the most marketable goods in the market. Attempts to use Cryptocurrency as money show the folly of using what cannot be money as money. Bitcoin since its introduction has been dominated by speculators, not users of the “good” or of the money, and the attendant price instability is obvious. 

This is in contrast to moneys such as silver and gold and money substitutes such as Dollars. Silver and gold in antiquity and today is used for Jewelry. Dollars started their life as money substitutes as they were receipts of actual goods. The U.S. Dollar started as a demand note that could be turned in for gold.

Citations

[1] Mises, Ludwig.

The Theory of Money and Credit: with an Introduction by Douglas E. French. Page 33.

[2] Menger, Carl.

Principles of Economics. Page 238

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