Money vs Utility in Crypto

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Money and Technology

Money versus utility is one of the deepest distinctions in crypto. Most people compare cryptocurrencies by asking:

• "Which technology is better?"

But money and technology obey different rules. A technology succeeds because people use it. A money succeeds because people hold it.

Those are almost opposite incentives.

Things like Solana, Sui, and XRP derive value from network activity. People need the token because:

• transactions consume it
• smart contracts use it
• applications run on it
• developers build on it

In some ways they're closer to:

• oil
• electricity
• cloud computing credits
• railroad capacity

The token is valuable because the network does useful work. The challenge is that utility creates pressure to optimize. If the network becomes expensive, users want lower fees. If a better network appears, users may migrate. The utility itself becomes a source of competition.

Things like Bitcoin, Monero, and Zcash are fundamentally different. The network isn't trying to perform useful computation. The token itself is the product.

You don't buy Bitcoin to run an application. You buy Bitcoin because you want Bitcoin.

That sounds circular, but so is gold. Nobody asks: "What application runs on gold?" Gold's primary function is being gold.

The less Bitcoin tries to do, the more focused it becomes on being money. And this is where the "hard money" thesis emerges.

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Imagine 2 Assets

Asset A

• Store of value
• Settlement layer
• Smart contracts
• Gaming
• NFTs
• DeFi
• Identity
• AI agents

Asset B

• Store of value only

Most crypto investors instinctively choose Asset A because it sounds more useful. But monetary theorists often choose Asset B.

Why? Because every additional purpose creates additional political pressure.

If the network hosts applications:

• developers want upgrades
• businesses want features
• users want lower fees
• regulators want controls

Eventually the monetary asset becomes subordinate to the ecosystem. Bitcoin's supporters argue that its greatest strength is its stubborn refusal to become anything else. Bitcoin almost behaves like a law of physics.

The network says: "Here are the rules. Take them or leave them."

That rigidity is frustrating from a technology perspective. It's beautiful from a monetary perspective.

Money benefits from predictability more than innovation. You don't want the dollar supply changing because developers found a cool new feature. You don't want gold's atomic structure upgraded every six months. The very thing that makes Bitcoin seem technologically boring is what makes many people trust it as money.

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Stocks vs Commodities

A utility token often resembles a stock. Not legally, but economically. You're betting on:

• adoption
• growth
• usage
• revenue-like activity

A monetary token resembles a commodity money. You're betting on:

• scarcity
• credibility
• durability
• neutrality

One is: "This network will become more useful." The other is: "This asset will remain trustworthy."

Those are very different investment theses.

One way to think about it is:

• Utility tokens compete like companies.
• Monetary tokens compete like money.

And history suggests that money tends to converge toward the thing that is the most singularly obsessed with being money and nothing else.

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That's why many Bitcoin advocates view all the extra functionality in crypto as features, while they view Bitcoin's lack of functionality as a feature too.