Crypto currencies aren't traditional currencies

"Their name tells us that cryptocurrencies like bitcoin are meant to be currencies: tokens of exchange used to purchase goods and services.

Yet even a quick glance at the most heavily trafficked cryptocurrency news sources certainly wouldn't give that impression. Instead, their coverage gives you the impression that what people are most interested in is trading cryptocurrencies—trading, the way we trade other securities, especially stocks.

This is why it is not at all uncommon in cryptocurrency circles to see constant discussions of cryptocurrencies as investments, completely speculative predictions of future price explosions, etcetera.

If bitcoin were primarily a currency, the only salient measure of its success would be its adoption by buyers and sellers of products and services. Volatility—whether positive or negative—actively militates against that usage. Volatility makes it dangerous for merchants to use bitcoin, unless they instantly exchange it for national currencies after every transaction, which seems to miss the point of a currency. If a merchant sells $4000 US worth of beer for 1 BTC, and then 1 BTC becomes worth $2000, the merchant has quickly lost $2000. The reverse equation is even more serious for the farmer who invests 1 bitcoin in $4000 worth of grain, planning to sell it for $8000 in the future, only to find that the original 1 bitcoin at harvest time would itself have been worth $16,000. The farmer would have been better off never spending the bitcoin in the first place. This is why deflation frightens economists so much: It's a huge drag on production. So it is no surprise to see merchants running away from bitcoin rather than toward it."