What even is money? Fortunately for both of us, people smarter than me have been analyzing this question for a long time. Nearly 150 years ago, a man named Jevons kindly broke down the functions of money for us. They are:
- A medium of exchange
- A measure of value
- A standard of deferred payment
- A store of value
Let's see if cryptocurrency passes these tests. Today, let's focus on...
Medium of exchange
You can send me 1 $BTC and I'll hand you the keys to my truck. The main problem here is finding people and businesses who can accept your crypto. They need to have a wallet before you can pay them. Not to mention the fact that sending me your bitcoin will (at least in the US) trigger capital gains tax. That's something you don't have to worry about when using the dollar.
That said, the challenges of adoption and legal recognition are not unique to cryptocurrency. I would run into very similar problems if I started printing Luke Bucks. Even trying to spend Euros, Pounds, Yen, or any other "real" money in the US is a challenge for these same reasons. Money has to be acceptable by the people who have the things or provide the services that you want to buy.
The other main challenge here is how unstable the price of cryptocurrency can be. You wouldn't want to buy a pizza just to find out later that if you'd skipped a meal, you'd be a billionaire. This leads to hoarding of the already scarce supply for most crypto.
So yes, crypto works as a medium of exchange, but it's not well adopted and it's not preferred by most people. This is evident with how often we talk about the price of cryptocurrencies. When's the last time you looked at the price of the US dollar relative to the Yuan? You're comfortable doing business with your local currency in the same way you're fluent in your native language, think in miles or kilometers, etc. You shouldn't need to mentally convert your money to use it.
P.S. To improve crypto's function as a medium of exchange, we need to expand the community of people who accept it. To do that, crypto needs to be disassociated from fraud and scams in the public's minds.