This is a guest post by David Orrell, a mathematician and author of books including Truth or Beauty: Science and the Quest for Order (Yale University Press). He is currently working on a book about money.

"I do not understand where the backing of bitcoin is coming from. There is no fundamental issue of capabilities of repaying it in anything which is universally acceptable, which is either intrinsic value of the currency or the credit or trust of the individual who is issuing the money, whether it's a government or an individual."  — Alan Greenspan

Is bitcoin money? To most readers the answer will be a resounding yes, but to many people, including former Federal Reserve Chairman Alan Greenspan, the answer is less clear. Indeed, one of the things holding back the adoption of cybercurrencies such as bitcoin is that they do not conform with traditional ideas about money.

Bullionists, for example, argue that money needs to be backed by precious metal – and bitcoin is not. Chartalists (from the Latin charta for a record), on the other hand, assert that coins and other money objects are just tokens that the state agrees to accept as payment of things like taxes. Again, bitcoin fails. Most mainstream economists, meanwhile, would ascribe to the view that money has no unique or special qualities, but instead is defined by its roles, e.g. as a medium of exchange. But emerging cybercurrencies do not have much use as a medium of exchange – at least at first.

So how do they become money? The answer to this question is that money of any sort has quantum, dualistic properties – analogous to the wave/particle duality of quantum physics – which allow it to be booted up from the ether.

As an example of quantum money, consider a U.S. dollar bill. On the one hand, it is a physical object which can be owned, traded and valued. On the other hand, it represents the number one, which is why it says "1" or "one" in fifteen different places. And numbers and things are as different as waves and particles. Numbers live in the abstract, virtual world of mathematics, while things live in the real world. Numbers are exact, while qualities such as perceived value depend on the person and the context. Numbers are hard and fixed, like the particle aspect of matter. Concepts or judgments such as worth or value are fuzzy, like the wave aspect of matter. The tension between these contradictory aspects is what gives money its powerful and paradoxical qualities.