Sovereign money is issued by central banks which, in fact, have a monopoly on the process of their creation and take care of maintaining their value. Sovereign money has three key characteristics due to which it can be considered "money": 1) they are a medium of exchange (i.e. a means of payment) at least in the country where they it is issued, 2) it is a unit of account (i.e. measure of value) in its issuing country and 3) serve as a store of the value of economic agents (i.e. means of savings).
Unlike sovereign currencies, cryptoassets are not money, because they do not have the three key characteristics of money. They can be used as a means of payment only in several countries, i.e. they have the function of an medium of exchange, but to a limited extent. Cryptoassets do not meet the other two characteristics of sovereign currencies, i.e. they are not a unit of account (for example, there are no economic agents who use cryptoassets as a unit of account in compiling their financial statements), and are not a store of value (i.e. the market value of cryptoassets denominated in a sovereign currency depends on the supply and demand of exchange platforms and shows high volatility in a short period of time). (back | back to Q&As about cryptocurrencies)
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