Cryptocurrencies are a novel consequence of the collision of a myriad of technological achievements: cryptography, computing, digital networks, blockchains, and code. Each of these achievements has contributed a strand of digital DNA that has given rise to remarkable new entities: decentralized, cryptographically secure digital currencies. The aim of this paper is to explore, examine, and articulate the rationale for the classification of this new technology as a currency. Further, to assess the technology, as it stands today, in terms of its suitability for the role it was envisioned to play—that is, a replacement for fiat currency. The methods employed in so doing are to examine the technology and its performance from the classical economic perspective, namely, the fulfilment of the functions of money. This paper also attempts to explore the nature and source of value as it pertains to currencies generally and cryptocurrencies specifically. This was attempted by examining the role network effects play in engendering value for currencies—digital or otherwise. The results of this examination are mixed. While the technology is promising, questions remain as to the role it will be allowed to play in a world where a nation state’s seigniorage remains a power not easily relinquished.

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