Editor’s Note: Bill has been taking a closer look at cryptocurrencies like bitcoin in recent weeks. So today, we share a recent interview with Bill’s longtime friend and New York Times best-selling author Doug Casey. Below, Doug sits down with our colleague Justin Spittler, editor of the Casey Daily Dispatch, to discuss why bitcoin is money.

Justin Spittler: Doug, you’ve owned bitcoin for some time now. How’d you get started in cryptocurrencies?

Doug Casey: I was first introduced to them several years ago in Cafayate, Argentina. A lot of interesting people come through town.

A young Belgian guy came to visit, and I bought him lunch, and we discussed bitcoin. He was a very early enthusiast. Because I bought him lunch, he gave me a physical bitcoin as a souvenir. They actually exist. They’re collectibles that have the codes inscribed on them.

I still have that bitcoin. At the time, a bitcoin was worth $13. Now, they’re trading for about $4,000.

So, for that reason, that was the cheapest lunch I ever bought anyone. I wish I had listened to his argument, because I could have made millions. About 300-1 over just a few years…

Justin: Yeah, it’s crazy how much bitcoin’s run over the last few years.

Do you think it’s headed even higher? Or is it a bubble about to burst?

Doug: I’m suspicious of where bitcoin currently trades. The bright side is that there will never be more than 21 million created. I understand that only about half of them have come into existence.

And there are only about 25 million people in the world that own bitcoin right now.

That’s a tiny proportion of the people in the world, and it’s going to grow. There’s going to be a lot more buying of bitcoins and other cryptocurrencies simply because so few people own them right now, and there’s good reason to own them.

Justin: I agree that the market for cryptocurrencies will get bigger. But why exactly?

Doug: Cryptocurrencies are only the first and most obvious application of blockchain technology.

I’m not a computer jock, but that’s unimportant when it comes to seeing the implications of the technology—much as it was unnecessary to be either a driver or a mechanic 100 years ago to appreciate the merits of the automobile. It’s been said that the blockchain technology may be the most important single development since the invention of the internet itself.

It’s going to change the way documents are transmitted, the way real estate is sold and registered, the way stocks and bonds are tracked, the way inventory is tracked. It’s a game changer in many ways.

As far as the cryptocurrencies are concerned, my original objection to bitcoin was that it’s not backed by anything. So, it’s really a fiat currency. It’s very much like the U.S. dollar, the Zambian kwacha, the Argentine peso, or any of the other 150-plus currencies in today’s world. It’s a floating abstraction.

But I missed something when I said, back then, that it had no value. It’s a fiat currency, but it has much more value than any other.

Justin: And what did you miss?

Doug: Aristotle defined the five characteristics of good money in the 4th century B.C. And his analysis is as accurate now as it was then. It must be durable, divisible, convenient, consistent, and have use value in and of itself. Based on that, Aristotle believed gold and silver were best suited for use as money. Let’s analyze how bitcoin does by these five criteria.

Durable. Bitcoin and other cryptocurrencies are definitely durable, unless we have an electromagnetic pulse (EMP) or a significant solar flare that wipes out all the computers. They’re not as durable as the metals, but they’re adequate, barring a collapse of civilization.

Divisible. They’re infinitely divisible. Better than the physical metals—although the metals can be accounted in tiny fractions too.

Convenient. Yes—as long as you have a smartphone, bitcoin is very convenient. But your smartphone, or something like it, may not always be with you. And your counterparty also has to have one. And it’s not very convenient if someone doesn’t know or trust bitcoin. Right now, that’s probably 98% of humanity.

Consistent. Absolutely. Every bitcoin is exactly like another one. It’s at least as good as .999 fine gold that way.

The problem I had with bitcoin to start with was the fifth point: does it have use value in itself, so you can’t get stuck holding the bag?

If you have a million U.S. dollars and nobody accepts them, they have no use in and of themselves. They’re just unsecured liabilities of a bankrupt government. Like a million Zimbabwe dollars. And a fiat currency is easily destroyed by its issuer. The things are burning matches. They have half-lives, like radioactive elements.

And I said that was the problem with bitcoin. But I was wrong about that.

Bitcoin is certainly a fiat currency like the dollar or the kwacha. But it’s also an excellent transfer device. You can move wealth from one country to another, or to another person, quickly and privately. I’d say secretly, but you’re not supposed to say “secret” anymore, you can only say “private.” Part of the politically correct corruption of language, I might add.

And you can do so outside of the banking system, which is increasingly important.

Hopefully, among other things, blockchain and bitcoin are going to destroy the SWIFT system, which is expensive (at least $50-$100 per transaction), slow (generally a day or two, sometimes a week or more), and insecure (who trusts either big banks or the U.S. government?). And SWIFT requires that all dollars clear through New York.

[Editor’s Note: SWIFT is used by thousands of banks around the world to send payment instructions worth trillions of dollars each day.]

So, this is the use value of bitcoin. It allows you to transfer something that is accepted as money outside of the banking system, and outside of fiat money currencies.

Justin: Would you go as far as to call it money?

Doug: Sure, because what is money? Money is a medium of exchange and a store of value. So, almost anything can be used as money. Some things are just much better than others.

Salt, seashells, and cows have all historically been used as money. After all, the word pecuniary comes from the Latin pecus, which means cow. And salary comes from the Latin sal, which is salt. Wampum were seashells. Cigarettes are money in prisons and war zones. Even giant Yap Island discs have been used as money.

Anything can be a medium of exchange, as long as it’s accepted. And bitcoin increasingly is. It fulfills that—or is in process of doing so. It will become more and more accepted as most government fiat currencies approach their intrinsic values—essentially zero—over the next business cycle.

Justin: What about as a store of value?

Doug: Well, this is more of a problem. You’ve got two kinds of currencies: commodity currencies and fiat currencies.

The commodity currencies are physical commodities. You know they have use value. Fiat currencies, on the other hand, are just made up. They’re totally arbitrary.

It’s like that joke about sardines. You’ve got eating sardines and trading sardines. Commodity currencies are like eating sardines. Fiat currencies are like trading sardines. Of course, there’s no guarantee that bitcoin is going to be accepted a year or two from now; if it’s not, it fails the store of value test. But it’s accepted at the moment. And it’s been growing in value at a spectacular rate—unlike fiat currencies, which have all been falling against real goods and services at about 5-10% a year. Incidentally, I don’t put much faith in the accuracy of government inflation figures.

But bitcoin is a technological innovation. There might be bitcoin 2.0 and 3.0. What will the current bitcoin then be worth? There’s a reason the expression “High tech, big wreck” is true. Just because so far it’s been a great speculation, doesn’t mean it’s a good store of value. Technology, a solar flare, or even government action could wipe it out.

The bottom line, bitcoin passes the medium of exchange test for the moment and store of value test for the moment. So you can definitely say it’s money—for the moment. But so’s the Argentine peso. I have little confidence bitcoin will be here, say, five years from now.

Editor’s Note: If you’d like to learn more about cryptos, we suggest you check out the work from our go-to cryptocurrency expert, Teeka Tiwari. Teeka spent all of last year traveling the globe, meeting cryptocurrency insiders, and learning everything he could about the booming crypto market. And it paid off—because he recently shared a play with his readers that shot up 27,166% in 6 months.

Teeka has just put the final touches on what he calls the Bitcoin Millionaire Master Plan, a crash course on cryptos that works even for complete beginners. Here’s the entire story on the Master Plan, including how you can get started for free…