Is a patent "money" or an "asset"?

In the last piece I called patents a "store of value." Many of you then asked the same thing.

"So is a patent money? Is it currency or an asset? And how much is it actually worth?"

It is a very good question. Today, as someone who has spent a career managing assets, I want to start from first principles. We will begin with "what is money?" and then map where Bitcoin and patents each stand. In depth, but kept simple.

1What is money? Three tests

Economics defines money by its functions, not by how we feel about it. Something becomes "money" only when it passes all three of the following tests.

• ① Medium of exchange: accepted anywhere, by anyone (you can buy things with it)
• ② Unit of account: it becomes the "ruler" that measures prices in the world
• ③ Store of value: its value holds over time instead of melting away

Put simply, money is something that "works anywhere (①), measures prices (②) and does not melt over time (③)." The won and dollars in our wallets have all three. They are complete money.

2Is Bitcoin money?

Let's start with the hot question and run it through the test.

• ① Medium of exchange → ✕ Weak: few places accept it; volatility and fees are high
• ② Unit of account → ✕ No: nobody thinks of a coffee as "0.0001 BTC"
• ③ Store of value → △ Debatable: it aims to be "digital gold" but can swing 10% in a day

3What about patents? Not money, clearly an asset

• ① Medium of exchange → ✕ Not at all: you cannot buy coffee with a patent
• ② Unit of account → ✕ Not at all: nobody prices things in patents
• ③ Store of value → ○ Yes: it locks innovation into a right and holds it

Of the three functions of money, a patent has only ③. So a patent is not "money" but an "asset," and more precisely an intangible asset you cannot see.

4Where does it sit among assets? The asset spectrum

Let's line up all assets along one ruler: liquidity and standardization.

Patents sit at the far right, near real estate and art. There are three reasons.

• Non-fungible: no two patents are the same. So there is no "market price," and each one must be appraised individually.
• Illiquid: you have to find a buyer yourself. A patent does not sell with one click the way a stock does.
• But it has cash flow: because it produces royalties, it resembles income-producing real estate that pays rent.

5How much is it worth? Three ways to value it

How do you value an asset with no market price? Professionals use three approaches.

• ① Income approach: discount the royalties and cash flows the patent will earn in the future back to present value (DCF, relief-from-royalty). This is the core of patent valuation.
• ② Market approach: compare against transactions and licenses of similar patents.
• ③ Cost approach: estimate what it would cost to redevelop or replace the technology from scratch.

So in the end, three things drive a patent's value.

• ① Does it actually generate revenue (royalties)?
• ② How much of its term is left?
• ③ Is there a risk it will be invalidated? (Higher risk raises the discount rate and lowers the value.)

6Its status as an asset: how far can it go?

The "asset status" of patents keeps rising.

• Already reached: patents are recognized as intangible assets on financial statements, can serve as collateral (IP-backed loans) and can even be contributed in kind as capital.
• In progress: through IP funds, securitization and real-world asset tokenization (RWA), they are evolving into "quasi-financial assets."
• Current ceiling: they still fall short of the full standardization and liquidity of money or stocks. They remain "non-fungible assets that need individual appraisal."

Closing: money circulates, assets must prove their value

"Money or asset" is not a fight over words. It is a question of which tests something passes. A patent passes the store-of-value test and is an intangible asset with cash flow.

Its value holds, however, only as long as the "right" underneath is strong. Putting a value on it is my job (finance). Protecting that right is the job of attorney Yoo Yeon (law).

"Money works everywhere. An asset has to prove its own value. A patent is an asset that proves its value."