Quote from: iamnotback on March 10, 2017, 12:53:11 PM

Unit-of-exchange. Unit-of-account.

I'd agree with that. But "becoming a currency" doesn't necessarily make an asset more valuable.

Lets say the UK government decided to "adopt" bitcoin overnight by denominating the entire economy in "BTC". So the next day, all prices in supermarkets would be in BTC, national accounts reported in BTC, bank account balances re-denominated in BTC and taxes charged and paid in BTC.

All that would happen is that the payment systems, barcodes, shelf labels and national report generators would be reconfigured (in terms of units) to display BTC instead of Pounds Sterling. The M0 to M4 money supply tiers would still exist and continue on at around £2 Trillion. So you'd have an effective broad monetary base of 1000 Billion bitcoins, even though only 15 Million existed on the blockchain.

However, since "currency" as a unit of measure and "monetary assets" as a store of value are distinct concepts, what would happen is that one would simply decouple from the other in terms of value. You can see that's already happened with all fiat currencies since they are mostly named after weights of metals (Peso, Pound etc). Nowadays:

1 Pound of sterling silver metal at spot price = 16 Ounces = £223 Pounds of sterling currency.

The thing is, this deflationary property that the base asset has (i.e. prices measured in pounds of sterling silver decrease while prices in sterling currency inflate) isn't confined to assets who's names happen to be adopted for price denomination. It happens anyway.

So the moral of the story is that cryptocurrencies - if they want to accrue value over time - should NOT model themselves on payment systems or currencies. They should model themselves on hard assets with limited supply that have the added bonus of being mobile on an electronic network and can therefore serve as an electronic "bearer token".

This's what makes them supremely powerful !