The motives for holding money are transactions, precautionary and speculative motive. Traditional notes and coins, or cash, are regularly used to undertake trades between two or more parties.

Cash is a relatively widely accepted means of payment to undertake transactions. A cryptocurrency can be used in the same way.

The main difference between holding money in cryptocurrencies or as traditional money is that given the use of cryptocurrency is not as widespread amongst the general public, the ability to undertake transactions is more restricted and there are less parties who uses it.

In terms of precautionary motive, there are no differences in principle. Holders of traditional cash or cryptocurrency could both hold funds for purposes of preparing for an unexpected event.

Both traditional cash and cryptocurrency can be held for speculative purposes and changed for other financial products. The overall acceptance of cash may be more widely spread but both may be held and gain in value.

Growth in cryptocurrency indicates that it can be highly profitable and volatile and may represent a more attractive proposition for speculative purposes. Cryptocurrency may be a riskier financial product as it is not backed by a central bank like cash is. Therefore, potential return from speculating in such a market may be higher, given the increase in associated risk.