Open Access

The emergence of cryptocurrencies has sparked significant debate regarding their role in modern financial systems. This thesis addresses two main aspects of cryptocurrencies: their viability as an investment asset and their potential to replace conventional fiat money. It especially focuses on Bitcoin and digs into the multidimensional nature of cryptocurrencies. This study clarifies the conflict between the perceived potential of cryptocurrencies as a respectable form of investment and their perceived speculative nature, as seen by their relationship with gambling-like behavior, through a thorough investigation. Examining Bitcoin's price volatility, market acceptance, and correlation with conventional financial assets are all important parts of the inquiry into the investment possibilities of this digital currency. The magic triangle of investing will be used as an approach to analyze the returns, liquidity and risks and compare Bitcoin with other investing assets. Furthermore, this study examines the viability of Bitcoin, as a replacement for fiat money by reconstructing Friedrich August von Hayek's monetary theory. The analysis covers the underlying technologies of cryptocurrencies, the idea of decentralized ledger systems, and the possibility of creating a reliable and effective means of exchange. This study evaluates whether cryptocurrencies could overcome the constraints and difficulties of conventional fiat currencies by contrasting Hayek's theories with the distinctive characteristics of cryptocurrencies.