Is Bitcoin money or asset ?

• Where Bitcoin sits on the ideological map
• From Adam Smith to Bitcoin
• The digital money behind digital ID
• Stablecoins - fiat 2.0 or an escape hatch?
• **When the loudest voices stopped believing their own pitch **
• Trojan-horsing Bitcoin, the right way
• The actual question

Bitcoin might be the greatest financial innovation we’ve ever seen. Yet economists and policymakers have been busy debating central bank digital currencies and stablecoins as the future of global payments, all of which are centralised, while Bitcoin keeps getting left out. 

As I was working on where Bitcoin fits into macroeconomics, a more fundamental question kept coming up, one that even Bitcoin’s own community still argues about:

Is Bitcoin money or an asset?

Money has to do 3 things at once: 

1. It has to work as a medium of exchange, something people accept in trade for goods and services. 

2. It has to work as a unit of account, a common measure that lets you compare the price of a car to the price of a coffee. 

3. It has to work as a store of value, something that holds its purchasing power long enough to be worth saving.

An asset only needs to do the third one. Gold, real estate, Apple stock - none of them buy your groceries and nobody expects them to. 

Bitcoin was designed to do all three. Satoshi’s paper is called “A Peer-to-Peer Electronic Cash System* *,” not “A New Digital Commodity.” It describes a system for people to send payments directly to one another. That was the founding intent.

But the market had other ideas. Volatility makes it challenging for Bitcoin to be a unit of account because a coffee priced in sats today looks different next month. Tax law in most countries treats spending Bitcoin like selling a stock, which in effect punishes anyone who tries to actually use it. And the wave of institutional money that came in through ETFs was never here to spend anything.

The Austrian school has a reasonable answer for this. Carl Menger argued money always starts as something people want to hold first. It only becomes a medium of exchange later, once widespread adoption makes trading it convenient.  So maybe this is just an early stage? 

But here is the problem. The longer we stay exactly where we are, benefiting from volatility and celebrating holders while ignoring spenders, the less likely we are to ever leave it.

Change is painful, but change we must. 

Broad usage of Bitcoin creates a price floor grounded in real demand rather than speculation. It won’t eliminate swings but it reduces the severity of crashes. Ultimately the more decentralised Bitcoin gets, the more hands it reaches, the more people who use it, the better it gets. 

Truth is, many who believed in Bitcoin as money have quietly moved on. There are very few still pursuing Bitcoin’s original ideology.  

Your answer to money or an asset tends to predict exactly where you land on the broader economic map. So let’s look at that next. 

§Where Bitcoin sits on the ideological map

Economics has spent more than two centuries litigating one core question: 

Who should control money, the state or the market? 

Every school of thought below is really just a different answer to that question. Bitcoin falls in or out naturally once you know where Bitcoin stands. 

The table tells most of the story but a few things are worth calling out. 

Keynesians believe markets don’t reliably self-correct. They argue that if left alone, recessions spiral and inflation destabilises economies. So they lean on two tools, (1) monetary policy, where central banks adjust the money supply, and (2) fiscal policy, where governments tax and spend to manage the cycle. Bitcoin removes both levers, which is largely why Keynesians generally reject Bitcoin as viable money.

Monetarists are worth a pause. Friedman believed inflation was always a money supply problem and wanted strict, predictable rules to manage it rather than reactive intervention. Bitcoin’s fixed supply schedule is arguably that same idea, just written in code rather than policy. But Monetarists don’t want to replace fiat, they want it better managed. Which is exactly why stablecoins appeal to this camp. 

Austrians and Libertarians want central banks gone entirely. Hard money only. Bitcoin fits both camps closely, which is why the hardest-line maxis tend to come from these two schools. 

Even inside that camp there’s a split worth knowing. Bitcoin L1 and Lightning are pure decentralisation with  no compromises. Sidechains, Liquid, eCash, Fedimint reintroduce some centralisation in exchange for usability. 

§From Adam Smith to Bitcoin

The state vs market argument is older than Bitcoin by about 200 years. Adam Smith argued free markets allocate resources better than any central planner. That view held until the Great Depression proved markets don’t always self-correct, and Keynesian intervention became the dominant framework for decades after.

It started unravelling in 1971. The US was running deficits it couldn’t back with gold, so Nixon ended dollar-to-gold convertibility. The world moved to pure fiat, backed by nothing but government decree and trust in the institution printing them. Whoever controlled the reserve currency controlled the world. That meant superpowers, political leverage, wars, and financial dominance. 

Bitcoin was born from that wreckage and what came next. Launched in January 2009, months after the 2008 financial crisis made central bank failures visible to ordinary people, the very first block Satoshi mined contained a newspaper headline about a second bank bailout. That wasn’t accidental. Bitcoin’s fixed supply schedule was a direct answer to two centuries of the same argument, except this time the rules would be enforced by code, not committees.

§The digital money behind digital ID

If the last five decades were about how much discretion central banks should have over the money supply, the next decade is about how much visibility and control they should have over how you personally spend your money.

Both Bitcoin and CBDCs are programmable money, but who holds the pen is everything. Bitcoin’s rules are fixed at the protocol level and enforced by thousands of independent nodes. No single party can rewrite them without convincing nearly everyone else on the network. On the other hand, the rules for a CBDC sit in exactly one place, which is the issuing central bank. It can see, tag, restrict, or expire your money at the level of the individual transaction. Officials call this efficient. In reality, it means your money can be turned off, geofenced, or made to expire without a court order and without you ever knowing why.

We already saw what this looks like. In 2022, Canadian authorities froze bank accounts of trucker convoy protesters without a prior court order. With CBDC, this will become a norm and no longer a headline. 

China’s digital yuan has run trials with expiry dates on distributed funds, sitting inside an ecosystem where social credit scores already restrict travel and services. Nigeria, India, the Bahamas, they all have CBDCs paired with expanding national digital identity systems. The pattern is consistent. 

If Orwell were writing 1984 today he probably wouldn’t need telescreens. Money programmable by a single issuer doesn’t need to watch you. The enforcement mechanism can decline to let you pay for the printer, the plane ticket, or the protest permit. The unsettling part isn’t that it’s more invasive than a telescreen. It’s that it’s far less visible, sitting inside an app icon that looks exactly like the banking app already on your phone. 

Malaysia is worth naming, not because it’s authoritarian but precisely because it isn’t. MyDigital ID went from optional to functionally required for SIM registration, transport services, healthcare, and government aid in under three years. Banks are being integrated through a regulatory sandbox running through 2026. None of this is a CBDC yet. But it is exactly the infrastructure a future CBDC plugs straight into. Once the underlying architecture exists, adding the money layer will move from an engineering project to a policy decision rather quickly.  

§Stablecoins - fiat 2.0 or an escape hatch?

A stablecoin pegs its value to a reference asset, which is usually the US dollar. It does this either through actual dollar reserves like Tether and Circle claim to hold, or through an algorithmic mechanism. The algorithmic model has failed too many times, with the Terra UST collapse in 2022 being the most infamous example. As a result, reserve-backed stablecoins now completely dominate the market.

My honest read is that stablecoins are simply Fiat 2.0. A stablecoin is a digital-native way to hold and move dollars, wrapped in blockchain infrastructure for speed and fast settlement. However, it still carries every single one of the dollar’s underlying properties. This includes exposure to US monetary policy, its role in enforcing dollar dominance, and a centralized issuer with the power to freeze your funds. Both Tether and Circle have done exactly that at the request of law enforcement

That said, for someone in Argentina, Turkey, or Nigeria watching their currency lose double digits in a single year, a dollar-pegged stablecoin isn’t fiat domination. It’s the fastest exit from a worse situation. 

Both things are true at once.

Where it gets complicated is the Lightning Network. Lightning was built around payment channels that use Bitcoin. Adding stablecoins at scale fragments the channel liquidity that makes Lightning fast and cheap in the first place. It also pulls custodial and reserve risk back into a network whose entire value was removing counterparty risk. A stablecoin routed over Lightning is only as trustworthy as the company behind it. That distinction does not get made often enough in the argument to just let all stablecoins in.

§**When the loudest voices stopped believing their own pitch **

This is where the money-versus-asset question stops being theoretical for me.

The most visible figures in Bitcoin have walked back the “spend it like money” pitch and moved toward “hold it like a stock” instead. Saylor’s Strategy, formerly MicroStrategy, is the clearest example. He raised billions through debt and share issuance specifically to buy more Bitcoin, turning a software company into a leveraged proxy for Bitcoin’s price. Dozens of smaller public companies copied the model. It pulled institutional capital and legitimacy into Bitcoin that didn’t exist a decade ago. But it also reframed Bitcoin for millions of new investors as something you buy and hold for shareholders rather than something you actually use. 

The same dichotomy shows up around companies that build around Bitcoin as a payments tool. Strike was founded to make spending Bitcoin fast and nearly free over Lightning. But Mallers’ recent drift surprised me as he leaned into positioning Bitcoin as a savings account and building lending products that let people borrow against holdings instead of spending them. Whether that is a natural extension of ambidextrous Bitcoin financial strategies, only time will tell.

Capital and engineering talent in Bitcoin over the last several years have overwhelmingly flowed toward custody, treasury products, and ETFs, infrastructure built for holding, while merchant adoption, point-of-sale tooling, and everyday Lightning usage have grown far more slowly. The industry taught an entire generation that the correct first move with Bitcoin is to buy it and not touch it. That’s a defensible personal financial decision and a direct contradiction of what a peer-to-peer electronic cash system is supposed to be for.

Block is worth noting as a consistent counterexample, building Cash App, Bitkey, and open-source Lightning development to make Bitcoin easy to use, while its corporate holdings grow organically rather than through debt or speculation.

§Trojan-horsing Bitcoin, the right way

The fastest way to encourage adoption is having Bitcoin as an option at every restaurant and shop in your neighbourhood. We see the impact of this across tens of thousands of storefronts in the US through Square. But what I love most is the ability to receive and send Bitcoin without even needing to understand the underlying technology or actively holding it. It makes using a global asset feel completely natural. 

From an international perspective, global trade has often left behind the smaller players. The economic policies, rules, shipping networks, and international bank transfers that make global trade possible were built for massive companies with legal teams and treasury departments. They were never designed for a tailor in Manila or a coffee farmer in East Africa waiting a week for a bank transfer to clear. Bitcoin fixes that gap from the edges. It reaches the exact places that the traditional financial system ignores, a gap I have been fascinated by for a while now.

But Trojan-horsing utility doesn’t just happen at the macro scale. It works on a personal level, too. Gifting is a smaller, gentler version of the same idea. I gave a friend’s newborn daughter her first sats instead of the traditional ang pow envelope of cash, and it landed better than I expected. I felt the same thing on Twitter years ago, sending a small Bitcoin donation to a struggling single mother of four also caring for her elderly sick parents. Nostr’s zaps carry a similar ethos.  These are small moves that put Bitcoin directly into someone’s hands as a functional tool. Every hand it reaches represents actual, grassroots decentralisation rather than another academic argument about what Bitcoin should be.

§The actual question

I don’t think the point of any of this is to force yourself into one box on that table. I think the point is agency. The more people actually use Bitcoin as money rather than just holding it, the more control individuals get back over their own spending and their own savings, instead of having those decisions made for them by a central bank, a shareholder base, or a piece of code they never chose to run.

I’ve been working through a collection of George Orwell’s essays and letters lately, alongside 1984 itself, and what stands out is how much of the book comes directly out of what he lived through, the propaganda he wrote for the BBC during the war, the poverty he saw firsthand, the betrayal he watched happen to a revolution he’d once believed in. He didn’t invent the surveillance state from nothing, he was describing patterns he’d already watched play out. 

We don’t need to have read Orwell to recognize the same patterns now. They are already there, in the ID that silently became mandatory, in the account that got frozen without a court order, in the app that knows more about your health than your own doctor does.

So would you rather trust governments, central banks, and shareholders to make these decisions for you, or would you rather use the tool that lets you decide for yourself? Once you have answered that, ask the harder question. Are you actually using or intending to use Bitcoin as money, or are you just holding it as one more asset while telling yourself you believe in the former?