Is Bitcoin (BTC) Really a Currency?

Often described as “digital gold” or merely a speculative asset, Bitcoin (BTC) is nonetheless used by its community as a tool for exchanging value, saving, and protecting against inflation. But does that make it a real currency?

Critics frequently cite Gresham’s Law or the slow speed of Bitcoin on-chain transactions, raising a persistent question: can Bitcoin actually fulfill the classical functions of money? Could it even replace the euro or dollar to become a daily-use currency?

To answer this, we must first define what money really is - and then examine whether, and how, Bitcoin fits that definition.

What Is Money, Really?

Before judging Bitcoin by traditional monetary standards, we need to agree on what "money" actually means - without falling into ideological or overly technical debates.

Aristotle’s Definition: Still Relevant?

In ancient times, Aristotle already defined money through three essential functions:

    - Unit of account: a shared measure to express prices.
    - Medium of exchange: a tool to facilitate trade without barter.
    - Store of value: a means to preserve purchasing power over time.

Mainstream media still rely on Aristotle’s definition to explain what money is - and sometimes to argue that Bitcoin doesn’t qualify due to its volatility.

But critics using that argument often ignore a key point: Aristotle also warned against government interference in the monetary system.

In his time, money took the form of metal coins (gold, silver, copper), which is far removed from today’s fiat currencies. It’s hard, if not impossible, to know whether he would have supported currencies based solely on trust in the central banks that issue them.

Each of Aristotle’s three monetary functions can be fulfilled to varying degrees depending on the currency, the era, and the geopolitical context.

Take the store of value function, for example: it's highly subjective and depends heavily on time horizon. Yes, the price of Bitcoin dropped by 76% between November 2021 and November 2022, but it has also increased by over 1,000% since 2020.

Conversely, the euro has suffered from consistent inflation: -2% in 2025, -10% in 2022, -20% since 2020, and nearly -50% since the year 2000 (based on the Eurozone Consumer Price Index).

In reality, money has taken many forms throughout history: salt, carved stones, shells, precious metals, the gold standard, and so on. In other words: Money is simply a tool accepted by a group.

Once a group agrees to use it, that instrument gains monetary status, whether it’s a euro, a cow, a gram of salt, an ounce of gold, or a satoshi. So when we ask whether Bitcoin is money, the real question isn’t whether it can become money, it already is, in certain contexts.

The more relevant question is: Can Bitcoin become good money, robust and relevant enough to replace fiat currencies?

Gresham’s Law: A Commonly Misunderstood Objection

Gresham’s Law states: “Bad money drives out good.”

In practice, this means that if two currencies are imposed at face value (e.g., 2 coins with equal nominal value but different material quality), people will hoard the good one and spend the bad one.

But this law only applies in contexts of legal constraint, where individuals are forced to accept both forms of money, such as businesses required to accept them for goods or employees being paid in them.

Now ask yourself: if people had the choice, would they really keep accepting bad money out of respect for Gresham’s Law? Or would they actively seek to get paid in the stronger currency, minimizing their exposure to the weaker one?

That’s precisely what Thiers’ Law argues: When people are free to choose, they adopt good money (rare, stable, reliable) and abandon the bad. When the local currency collapses, citizens naturally turn to sounder alternatives, even when doing so violates legal tender laws.

Why Do We Use the Fiat currenci€$?

Because the law requires it.

     - Salaries must be paid in euros.
     - Taxes must be settled in euros.

This monetary monopoly maintained by the state explains, in large part, why people continue using a currency, even when it’s widely acknowledged to be “bad” money.

Bitcoin, on the other hand, has no such legal privilege. Its legitimacy depends entirely on voluntary, individual adoption.

And yet its use continues to spread rapidly - even in places where, according to Gresham’s Law, it should be hoarded rather than spent.

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Does Bitcoin Meet the Criteria for Good Money?

Bitcoin’s base layer is intentionally slow (1 block every 10 minutes on average) to maintain security and decentralization. That may seem inefficient for daily payments, but it’s necessary to preserve Bitcoin’s long-term resistance to attacks and monetary manipulation.

Medium of exchange: Getting Higher to Move Faster

However, in 2018, the launch of Lightning Network, a fast and scalable payment layer built on top of Bitcoin, changed everything.

Today, using Lightning:

    - you can pay for a coffee in under a second,
    - with nearly zero fees,
    - in a fully peer-to-peer way.

Thousands of users already use Lightning for apps, games, or supporting content creators. Bitcoin is circulating. It’s usable.

Lightning still comes with technical complexity, but newer technologies and protocols (like Ark, Spark, and Liquid) are actively improving user experience and hiding the infrastructure, making adoption easier for the general public.

Store of Value: A Growing Role

In countries experiencing inflation over 50%, Bitcoin is sometimes the only viable savings tool outside of the collapsing national currency.

    - In Argentina, savers turn to Bitcoin to escape the devaluation of the peso.
    - In Nigeria, despite the government pushing the eNaira, citizens prefer Bitcoin (and stablecoins) as a safe haven.
    - In Lebanon and Venezuela, Bitcoin has become an individual hedge against bank failures.

Even in so-called "stable" economies, more people use Bitcoin for long-term saving, often because of its programmed scarcity (only 21 million BTC will ever exist), but also for the sovereignty it offers: with Bitcoin, you don’t need a bank anymore.

Unit of Account: Still Rare, But Emerging

Today, few goods or services are priced in BTC, mainly due to volatility. But that could change over time.

To become a true unit of account, Bitcoin or the satoshi (its smallest unit: 1 BTC = 100 million sats) would need to reduce price volatility first.

Still, some merchants, especially online or in Bitcoin-forward countries like El Salvador, have started displaying prices in sats. It's still a minority use case, but the monetary foundation is there.