To many people, cryptocurrency is many things. For some, it's a concept that threatens to destabilize the current financial system. For others, it's the newest and most exciting investing vehicle. For some, it is a novel method of payment. Some regard it as a minor component of the larger blockchain technology, which is the true disruptor. Regardless of this, the public's perception of cryptocurrencies can be divided into two categories: investment tools or means of trade. 

The majority of the enthusiasm surrounding cryptocurrencies appears to occur when a major firm chooses to accept it as a form of payment or when the market experiences a bull run.

While there is much more to crypto than these two applications, this appears to be the dominating narrative. Is one better than the other, though? Should we see cryptocurrency as an investing tool or concentrate on its potential to replace fiat currency?

A Tale of Two Possibilities

There's no denying that cryptocurrencies may serve as both an asset and a medium of exchange. It counts as a currency as long as someone is prepared to accept cryptocurrency as payment. Crypto has the ability to compete with or even replace fiat currency, according to some who see it as more of a currency than an investing instrument, and this is something that should be pursued.

Some people feel that cryptocurrency will solve some of the problems that exist in the fiat system, including anonymity, centralized control, and cross-border transactions. However, when cryptocurrencies grew in popularity in the 2010s, many people realized there was money to be earned in holding a token and selling it at a higher price.

This is similar to how stocks are purchased low and sold high, and the narrative around many cryptos is similar to that of equities. After all, the majority of those who have recently purchased cryptocurrencies are likely doing so to earn a profit rather than to make ordinary purchases. This raises the question of whether cryptocurrencies can still fulfil their aim of being a universally accepted means of payment, or if they are doomed to remain nothing more than an asset vehicle.

Merging the Two Possibilities

Finally, the notion that cryptocurrency may only be used as an investment instrument or a medium of exchange is both wrong and restrictive. Over the last decade, cryptocurrencies such as bitcoin have demonstrated that they can do both at the same time while also serving certain sector roles.

In the case of crypto as a means of exchange, it normalizes token use and gives the industry much-needed visibility, which benefits the general public. Cryptocurrency has also shown to be a useful investment instrument, as it provides a less expensive and more accessible alternative for ordinary people to generate money than traditional stocks and shares.

While there should be a long-term goal of having cryptocurrencies as widely accepted as fiat currency, there's no harm in developing bitcoin as an investment vehicle in the meanwhile.

As the sector evolves, additional sub-categories of cryptos will most likely emerge, with some cryptos serving only as payment instruments and others serving as investment vehicles. The fundamental distinctions between the two will most likely be apparent in the underlying blockchains, as some will be designed for mass use. Then there's the question of price stability, with payment tokens having more steady pricing that isn’t subject to the existing market's regular volatility. 

To summarise, cryptocurrencies are a highly sophisticated idea that can exist in a variety of forms, including payment and investment.

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