We analyze a simple continuous-time, general equilibrium model, in which agents can invest their wealth in a production technology exposed to shocks and in fiat money issued by the government. The government relies on seigneurage and wealth taxation to fund public spending. If the government is non benevolent, in order to extract rents from agents it runs an expansionary monetary policy, which can lead to hyperinflation. When agents can also invest in a cryptocurrency, they can use it to buffer productivity shocks while avoiding public currency hyperinflation. This puts a cap on how much the government can inflate and extract rents. Thus, agents’ welfare is larger with cryptocurrency than without. We analyze a simple continuous-time, general equilibrium model, in which agents can invest their wealth in a production technology exposed to shocks and in fiat money issued by the government. The government relies on seigneuriage and wealth taxation to fund public spending. If the government is non benevolent, in order to extract rents from agents it runs an expansionary monetary policy, which can lead to hyperinflation. When agents can also invest in a cryptocurrency, they can use it to buffer productivity shocks while avoiding public currency hyperinflation. This puts a cap on how much the government can inflate and extract rents. Thus, agents’ welfare is larger with cryptocurrency than without.