Why Most People Misunderstand Bitcoin as a Store of Value: Musk's Take on Cryptocurrency Fundamentals

Most investors and cryptocurrency enthusiasts believe Bitcoin and other cryptocurrencies are interchangeable for various use cases. However, Elon Musk has challenged this conventional wisdom, arguing that very few people truly grasp the fundamental nature of what money should be. According to his perspective, the confusion around cryptocurrency roles stems from a misunderstanding of the basic principles that differentiate a store of value from a transactional currency.

The Critical Design Flaw: Why Bitcoin Falls Short as Daily Currency

Bitcoin, despite its pioneering status in the cryptocurrency ecosystem, faces inherent technical constraints that make it unsuitable for everyday payments. The blockchain’s limited transaction throughput and the resulting elevated transaction fees create a structural barrier to high-frequency trading scenarios. From a design perspective, Bitcoin was never optimized for the speed and cost-efficiency that real-world payment systems demand. Instead, Bitcoin functions more effectively as a digital asset for long-term preservation of wealth—a store of value example that demonstrates how cryptocurrencies can serve entirely different purposes from traditional money.

Musk emphasizes that understanding this distinction is crucial. Bitcoin’s architectural choices prioritize security and decentralization over transaction speed, which is fundamentally incompatible with the requirements of a practical payment currency. The store of value example presented by Bitcoin shows that not every cryptocurrency needs to excel at transaction processing; some are better suited as wealth preservation tools for portfolio allocation.

Dogecoin: The Unexpected Solution for Practical Transactions

Interestingly, Dogecoin—which emerged as a humorous parody of the cryptocurrency market—actually possesses superior transaction characteristics for real-world payment use cases. Its network architecture allows for faster block times and lower per-transaction costs, making it considerably more efficient for payment processing. This apparent irony reveals an important truth: cryptocurrencies succeed or fail based on alignment between their technical design and their intended application.

While Bitcoin serves as a store of value example of long-term asset preservation, Dogecoin demonstrates the opposite principle. Its practicality in transaction execution has given it unexpected utility in scenarios where Bitcoin’s limitations become problematic.

The Fundamental Question Most People Fail to Answer

Musk’s core argument transcends the simple Bitcoin-versus-Dogecoin comparison. He points to a deeper issue: most people cannot articulate what “currency” fundamentally means or what properties differentiate a store of value from a medium of exchange. This conceptual gap explains why many investors treat all cryptocurrencies as interchangeable or expect Bitcoin to function as both a store of value and a high-volume payment system simultaneously—a logical impossibility given its technical constraints.

The reality is that every currency must optimize for specific economic functions. Bitcoin chose to optimize as a store of value example in the digital age—prioritizing immutability, scarcity, and network security over transaction throughput. Dogecoin, by contrast, optimized for the opposite: accessibility and transaction efficiency. Neither is “better”—they simply serve different purposes in the cryptocurrency ecosystem.

The Broader Implication: Matching Cryptocurrencies to Their Purpose

Musk’s perspective suggests that the future of cryptocurrency adoption depends less on technological perfection and more on honest assessment of what each system does well. Bitcoin will continue to function as a store of value example of digital wealth preservation, suitable for portfolio diversification and long-term holding. Other cryptocurrencies, whether Dogecoin or alternatives, will find their niche in transaction-oriented applications.

The cryptocurrency community would benefit from abandoning the notion that one digital asset must serve all purposes simultaneously. Instead, understanding the specific design philosophy and constraints of each system—recognizing Bitcoin as a store of value example rather than expecting it to replace daily payment infrastructure—represents a more mature approach to crypto adoption.