Criptocurrency and Money The Way of Interaction

DOI: 10.20542/0131-2227-2018-62-10-64-70

M. Portnoy (, 
Institute of USA and Canada Studies, Russian Academy of Sciences, 2/3 Khlebnyi Per., Moscow 121069, Russian Federation 

Abstract. The appearance of cryptocurrencies in modern economy raises questions about the nature of this phenomenon. The first question is – if cryptocurrency a new kind of money. It is difficult to answer this question definitely because till recent time the nature of money remained to be a subject of discussion. Now we have a good founded conception, which represents modern understanding of money. It is based on two principles. The first principle is the desire for wealth which exists in any human being, and in the human society as a social community. The second principle is the equality of exchange as a law of economy. Keeping in mind these two principles, we discover that mankind during the whole its history created and used only two kinds of economic operations, which are two kinds of equal exchange: trade and credit. First common economic operation in history was trade, while credit was rather an occasional one. So, money had emerged first from trade. The trade deal was performed by two independent participants. So, the only guaranty of equality of the exchange was the own value of the commodity which was used as money. This is why trade created commodity money, and the best commodities for this task were gold and silver. Credit created a verbal or a written agreement, which was an equivalent of the value of the loan. Commodity money was inconvenient for capitalism, and capitalism created its own money from the agreement between participants of the credit deal. It was possible because capitalism created close economic relations between people. Credit money is in accordance with the requirements of capitalist economy, it performs all necessary functions, it adapts good the influence of progress, and it is convenient for various needs. Modern capitalist economy doesn’t need other kinds of money. Accepting this conception, we treat cryptocurrencies as tokens of various kinds, but not as money. In spite of the word “currency” in the name, these financial instruments are not currencies but tokens suitable for transfer money and some other needs. The anonymity of the deals with these instruments, the absence of public control and some other qualities of that kind became the reason of strong demand for cryptocurrencies and of the rise of their price, especially the price of bitcoins. Flight of capital, some other illegal deals, as well, as the possibility of rapid enrichment attracted people to operations with bitcoins but the rise and fall of its price exposed the scale of risks of such operations. Nevertheless, the main merit of cryptocurrencies is the blockchain system. This system can be successfully used in various industries where exists a need for fixing big numbers of items or of operations. This reasons demand from government economic policy to be careful and wise. The state has time to wait until the processes in this sphere will become more clear and stable. The same approach must be implemented to government regulation of ICO as a new method of attracting investments for business projects. The fact that many deals of that kind were used just to take off money from people must not became a reason to ban these deals. Blockchain system, cryptocurrencies and ICO create a new civil financial society with some kind of self-regulation. Such processes are typical for contemporary time, but they don’t mean introducing a new kind of money. The digital revolution will create its own way of interaction of these instruments with existing credit money, and the new system will inevitably demand some sort of state regulation. 

Keywords: cryptocurrency, commodity and credit money, bitcoin, blockchain, ICO, dollar, Ruble 


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For citation:
Portnoy M. Criptocurrency and Money The Way of Interaction. World Eonomy and International Relations, 2018, vol. 62, no. 10, pp. 64-70.

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