Should Bitcoin Just Be a Currency or Store of Value?
Introduction
It's been about a year since I joined Steemit and I thought it would be useful to have a little competition to celebrate.
I've noticed some of the discussion and engagement has gone down so to get people active again I thought it would be nice to have a debate and put it together with a competition to make it fun.
Therefore I will power up the account of my favourite comment from this post with 500 SP.
(NB the SP will be in your account NOT DELEGATED.)
The question to discuss is -
"Should Bitcoin Just Be a Currency or Store of Value?"
-If so give your reasons why, if not do the same.
People who upvote their own comment will get automatically excluded. I reserve the right to change the rules should I find anyone trying to game this in any way and the final decision will be mine on or after 3pm GMT on Saturday 8th July 2017.
Please also share this on Twitter and other social media as it might help to bring in new users.
(N.B. - I shall be travelling to Manchester today so depending on that I won't be able to respond to comments right away. Please hang on and I will get back to you later.)
My Thoughts on This Question - Keep it Simple
Basically the primary thrust of my argument on this comes from the fact that as the first successful implementation of blockchain Bitcoin is a special case:
It acts as a gateway to all other cryptocurrencies so their success and failure is somewhat tied to bitcoin itself.
This is even more so because bitcoin is the only cryptocurrency (at present) that exists in the general public consciousness.
Any kind of failure or perceived failure in bitcoin has a massive effect on the perception and progress of cryptocurrencies in general.
The more attempts people make to add extra features onto the bitcoin blockchain, the more complexity that gets added to it and to be honest it doesn't even work very well.
Just look at how people have abandoned projects like Counterparty - for solutions which offer them more flexibility.
By keeping Bitcoin primarily as a store of value and/or a currency we keep it simple and in theory at least reduce the bloat on the primary blockchain.
It may also help to reduce future arguments and schisms over protocol changes, as there will be less impetus to add new features to try to compete with newer projects.
So in summary, I believe keeping Bitcoin focussed and working optimally as a form of currency is hard enough and so should be the only focus. In some cases simplicity is best.
What do you think?
Thank you for reading
@thecryptofiend: I will submit my answer for your question according to my point of view.
"Should Bitcoin Just Be a Currency or Store of Value?"
In order for Bitcoin to be a currency, there need to be some changes especially when one considers the what is required from a currency. Firstly the transaction time for Bitcoins take to long and it is far too volatile. If it is compared to other currencies such as the US$ and the Euro a person will notice that fluctuations are very small and on a daily basis probably less than 1%.
Therefore you need to consider the implications of when a person borrows money to buy a house or car. If Bitcoin is used at the current volatility and can change as much as 40% in one month one will never be sure what needs to be paid back. In order for Bitcoin to be secure, the mining system is used and this makes the transaction time very slow compared to other major currencies.
Taking the two limitations into consideration it will be difficult to envisage Bitcoin being used as a currency until it is stable and the transactions are almost instantaneous. Therefore as it stands now it could safely be used for speculating purposes and as a commodity asset such as gold or silver.
Can it Survive solely as a store value?
The answer, in short, it probably cannot. The reason is that as things stand today there are very few people that are using it at as a currency. The reason that the value of Bitcoin is driven up is that the speculators are believing that somewhere in the future there will be more people using at as a currency and other related applications. But if that does not materialize then the value will slowly collapse as the demand drops.
Bitcoin, unlike money, is set at a fixed amount that will ever be mined. This will create a problem when at some time in the future the economies will still be growing which could create a deflation situation. The basic principle of money is that the money supply should keep up with the economic growth. That will not be possible with Bitcoin after it has reached a number of Bitcoins that can be mined.
Future of Bitcoin
At the moment it is probably too early to establish whether Bitcoin should be used as a stored value or as a currency. Due to the volatility of the currency, it would be difficult to use it as a currency but at the moment it is performing well as stored value.
Without it being used as a currency the stored value could eventually collapse therefore it requires both. For it to succeed as a currency for years to come and as stored value, it will need more recognition as many countries have already banned the use of Bitcoin and some developing countries do not have the infrastructure to trade in Bitcoin. Unlike gold which is accepted by virtually every country and is classed as one of the best ways to invest.
Thank you so much for reading, have a good day!
Hi - you didn't win the 500SP - there was one answer I liked slightly more but I think it was so close that I still wanted to award you something for your great answer. I am going to power up your account with 100SP - not a lot but I hope it helps:
@thecryptofiend: Thank you so much, i really appreciate your generosity and thoughtfulness.
@gwiss: Congratulations mate!
You're welcome. Thanks for such a great response:)
Excellent answer!
Thank you so much for reading, really appreciate that. I know it was bit long sorry about that but hopefully i clear my points well. REGARDS!
3 functions of money:
Store of value. This is where money gets its start -- it's held for value before it becomes money, and because everyone holds it, its reputation as a store of value becomes universal.
Medium of exchange. Everyone knows it is valuable, so people will accept it as a placeholder for barter, which mitigates the "coincidence of wants" barter problem -- medium of exchange is the second stage for money acceptance.
Unit of account. Once everyone uses it and the market tells us what everyone thinks it is worth, then we start to think of the prices of everything in reference to that money --how much gold something costs rather than how much gold you have. At this stage money shifts from numerator to denominator.
There are many other qualities of money (portability, divisibility, etc) but these are only things that separate good money from bad.
Now to some extent, these three functions of money are like 3 legs of a stool -- until that stool has 3 legs, no one wants to sit on it, and therefore it's difficult to gain universal acceptance. Without store of value no one wants to hold it, without medium of exchange it is unlikely to be accepted, and without unit of account no one knows what it is worth.
So getting these 3 going is like breaking into a ring -- where does the whole thing start? Cryptocurrency is a new beast -- it will never be held because it is valuable intrinsically -- what really is the point of holding proof of a computation that no one needs or asked for, after all. The only reason to hold it is that other people also think it is valuable. Thus establishing that value link to the real, physical world is the primary limitation for cryptocurrency in general.
Fortunately, cryptocurrencies have already fulfilled the first function of money in people's minds. Bitcoin has created enough visibility that people now are willing to accept that it is worth something (thrashing out exactly how much is where the volatility comes from right now.) This is the most difficult hurdle to cross, yet here we are, only 8 years later and there is already money pouring into it because everyone has already accepted that it is worth something.
We are currently fighting our way through the second function of money, but as more governments bend to the inevitable like Australia and accept it as currency, this will slowly get ironed out. And then, eventually, we will all start to think of the physical world in units of cryptocurrency as it shifts from the numerator to the denominator of our world view.
The explosion of competing cryptocurrencies are the flip side to their detachment from the real, physical world. Being unlinked from the real world is why they are so useful, after all -- you can't verify that gold is gold through the internet due to the physics limitations on matter, but you can verify that crypto is crypto. But being unlinked from the physical limitations of matter also means that there is no barrier to entry. The deluge of new cryptocurrencies will not stop any more than new cars, computers, or phones will stop being developed and launched into society.
The next stage for crypto, while it continues to gain larger acceptance, is for the market to start sorting out all of the qualities of good crypto money. For physical money, these are things like portability and divisibility and fungibility. For crypto, there will be a whole new list of qualities in addition to the traditional money qualities that must be met in order to qualify as a "good" cryptocurrency -- speed of transactions, cost of transactions, security, etc. And the market has and will continue to produce many varieties with different qualities that the market will try out and judge.
Which finally brings me to the point (I know, not a minute too soon...) -- bitcoin was a prototype. As a prototype, it was designed just for transactions. There is a whole lot more that the blockchain concept can handle, but bitcoin wasn't designed for that. Trying to add on more and more functions is like bolting on parts to a model T or continuing to upgrade an apple IIe. I don't mean any offense to bitcoin here, but there is only so much that the architecture can handle. How well blockchain handles additional tasks depends on how it is designed. They are not all the same, which is why there are so many varieties currently.
Bitcoin changed the world. But trying to make bitcoin be everything runs the risk of it doing everything poorly, and that would be a big step backwards for cryptocurrency. Let Bitcoin do what it was originally designed to do so that it can continue to do that well.
Brilliantly put.
Well done! You won the prize I will power up your account now.
I think that bitcoin cannot be a currency for now because of following reasons-
Unstable
Transaction time
As a trader's view I don't want crypto-currency to become stable but if it's to be used as a currency. Then I prefer it to be stable, I think it can be stored as a store of value for technical people., who can quickly manage the situation that even if it crashes.
So these are my views
And I want to thank you for the contest I was feeling the same so I started a contest by my own to encourage new people.
Wait -- native currency -- the USD? The fiat that is based on debt? Falling since 1913? That stable?
I am being a little facetious here - because all Central Bank Fiat as all but stable. It's a subject for another time though.
I do agree that it's falling but the change is not so much in short interval of time . What I am trying to say is that Bitcoin can pretty damn high or low within 1 day if I want to buy a car with Bitcoin that that I purchased yesterday . And Bitcoin crashes today.Damn I am bound I will have to buy a wolkswagen instead of lambo 😂
True - it is still volatile. I think it will level out to a more stable asset/currency once the mining has been completed.
BTW, VW is good German engineering. And lots more fuel efficient. 🚗 🤣
Lol the VW won't catch fire when you are driving it!
There is that 🔥
WV is a good company but it 's cars don't have potential to steal someone's chick. Lambo's do have
LOL just kidding
Roar's V12 and steals @globocop 's chick
WHICH ONE 👧
@varunsangwan?
One who is sitting along me in lambo
asks name
she- denies to answer
Great answer mate. Short, clear and to the point!
correction 'to the point' instead of 'too the point'. ; )
Lol thanks!
HAHA Thank you man. Glad you liked that. Always feel good when I see your posts, you present something surprising every time
I am telling you that bitcoin is both a commodity and a currency. It is a commodity since it is a property that you can purchase using dollars or fiat currency. But it is also a form of currency since you can use it to purchase things online and is also given as a form of salary in online jobs. Bitcoin becomes a commodity even it is a currency because it is not independent in itself it is backed up by dollars to have a value.
And for the Store of value, In my opinion that bitcoin is an awful currency, and one of the reasons for that is the volatility we're seeing. Can't have money fluctuate like that and still retain the drive to spend it. I guess that argument might also go against it being a good store of value, but I think it's more that than a currency.
Yes the volatility is a big problem.
Thanks for the awesome opportunity here @thecryptofiend
My entry is the video above, basically I'm on the side of Bitcoin should be moreso an asset (storage of value) rather than a cryptocurrency. In a perfect world it would be both, but unfortunately we don't live in such a fantasy.
Bitcoin's main problems are with the public perception of things. It's unstable and highly volatile, it's slow and has high fees, and as it begins to go a little more mainstream it's reputation will be better however some will always still associate it with scams, thieves, the dark net, drugs, ponzis, etc.
In order for Bitcoin to truly succeed as a cryptocurrency that is accepted worldwide and would have a chance to replace or at least be amongst the regular FIAT currencies, it would need to be welcomed by the masses. The average person is still confused by it and extremely skeptical. Don't get me wrong, I'm a BIG fan and advocate for BTC and similar, however it has a very lengthy journey up ahead of itself. It's got more use as an asset currently and to be treated like gold by the large investors. Maybe if there were drastic changes done to it, maybe it'd have a chance at being an "actual" currency but in its current state.. not so much. And IF there were such changes made, how would that have an effect on Bitcoin and the cryptocurrencies themselves?
Very interesting time we're living in, and I'm both nervous and excited to see what will happen over the next few years. Will our kids grow up using BTC? How many countries/governments/banks will recognize and accept it? Is it just a commodity for a select few who distrust the current system? So many questions, and only time will let us truly find out.
May the best selection win the 500 SP. I encourage many of you viewers to enter. Cheers :)
Store of value is a spook. Value is a spook. Currency is a spook.
Not sure what you mean by spook - you mean like a ghost?
A ghost of the mind. It looks like you haven't read up on max stirner. A spook is something that doesn't objectively exist but you still let control you. Morals, property rights, and currency are some examples.
This comment has received a 2.95 % upvote from @booster thanks to: @anarchyhasnogods.
Interesting.
This comment has received a 1.48 % upvote from @booster thanks to: @anarchyhasnogods.
I am a huge proponent of the KISS Principle (or Occam's Razor if you want to go erudite). Keep it simple... One reason is that not everyone that comes into the crypto market has the same experience as perhaps someone like you. In other words, they don't understand what's going on and have to have some concrete point of reference... currently, that seems to be Bitcoin. It's the bell-weather by which all other cryptos are judged and people need to be able to understand it.
I know nothing about cryptos... other than Bitcoin and Steem. Etherium, I've heard of but beyond saying it's a cryptocurrency- I can tell you nothing. Now multiply that by 50 or 100, or how ever many other cryptos there are... imagine the confusion for someone just entering the market- which way to turn? What is this worth? What is that worth? What can I compare it to? Ah, Bitcoin!
There are a number of other reasons I can think of, but I'm not writing War & Peace. Just for the simple reason of making the market understandable for a new and uninitiated, for the most part, clientele is reason enough. Thanks for hearing me out.
Sometimes keeping it simple is very important. That applies not just to Bitcoin but to your response too - I think you know more than your humble words would imply! Thanks for taking the time to respond mate:)
Thanks for taking the time to read.
I think it should be used more throughout our daily lives to make transactions to buy a product. I think this will drastically increase the volume of trade of BTC making the currency less volatile as well as it would help it be recognised by a wider audience leading to further growth as well as more investment into the currency. However, I don't think it will be used by anyone. I think most people will grasp tightly to their Dollars, Pounds or Euros but this will mostly benefit BTC enthusiasts.
Also, if it is available across the world to use in consumer stores think of all the time you will save as well as money as you no longer will have to convert your national fiat currency to another and pay extraordinarily high conversion fees.
However on the other hand bringing all this new attention and volume of trade will lead to the already excessively long transaction time to increase and people may start turning towards other altcoins such as Ethereum or Litecoin and I don't think it is great to have different organisations accepting different coins; it just adds more hassle as well as the loss of some money due to coin conversion fees. However, it could lead to currencies like Steem, Ethereum and other coins to be able to stand for themselves and not be drastically affected by BTC.
Moreover, it will take away from what everyone loves about BTC; it is anonymous. I can see in the future with many people using BTC on places like Amazon it would take away from the anonymity as someone's Bitcoin Wallet Address may have to be linked to their Amazon account which will contain one's name, address and other details.
In the end, I think it is better for it to be of Gold and Silver. Something to speculate over but it is not a great storage of money as the volatility does not ensure it.
This is the most I've ever typed regarding cryptocurrency haha.
Well, I hope you have a great trip to Manchester @thecryptofiend
Great answer. I think it is pseudo-anonymous rather than truly anonymous as various people have been able to demonstrate the ability to trace some transactions. As for the volatility I think it is part of the market and hence volumes involved still being small compared to other markets.
Manchester trip turned into a nightmare on the way back sadly due to roadwords and one of the main roads being close. Was dawn before I returned!
That sounds terrible.
The scorching heat in the UK probably didn't help much as well.
Hope all is well now.
Thankfully it was quite cool yesterday - in fact the rain was more of a problem.
Bitcoin shall be a store of value primarily.
It is not suited as a payment currency, it is far to slow for that. So use it for what it is good for, value store and 'save haven' for anybody who have money in crypto.
Bitcoin network is slow
That is not an issue for value storage.
Bitcoin has by far the largest market cap and is most stable crypto in the market
Therefore a good store of value.
Mass public
They indeed know only of Bitcoin and this will be like that for the foreseeable future, again THEY reason why Bitcoin will be the perfect store of value.
So many other coins have better implementation for speed and flexibility: let them provide the things required for the market segments they build their blockchains for.
De-centralised
Maybe Bitcoin is also the most de-centralised crypto in the market. That is a huge +!
Short and to the point. Beautifully presented too. I think this is one of the best summaries of the main points I have seen. I would also add that it is in theory at least also the most secure.
Thanks man! Although I can write long stories, I think the shorter versions are better :) Good question you asked, and great you're running this challenge to get interaction going. Appreciate your efforts really much.
First of all, I would like to remind everybody the circumstance of bitcoins birth. Bitcoin was born right after the 2008 financial crisis, that brought global economies to their knee. People lost houses, businesses, financial assets, and much more. Businesses went bankrupt, stock market collapsed. Crisis was compared to the great depression of 1929 that lasted for quite a while.
Main cause of the crisis was the financial and banking systems. Central banks can create money at will and fractional reserve system allows banks to gamble with 90% of the money deposited. Brilliant minds already had cryptocurrency proposals even before bitcoins creation. There were multiple alternatives before bitcoin. It was the right timing and elegance of Satoshi Nakomoto’s bitcoin whitepaper that finally made it possible.
Store of value is in bitcoins DNA, that’s why we call it digital gold. It encompases all best features that gold offers and gets rid of problems that gold as store of value has. Compared to gold, bitcoin supply is predictable. You can’t all of the sudden find large gold mine that can drastically drop prices. Supply increase is fixed and limited in bitcoin and most importantly supply is predictable. Bitcoin improves traditional gold with ease of transfer and transportation. Finally, it cannot be easily taken away from the holder of the bitcoin.
For these reasons bitcoin will remain as store of value. Going back to the reason bitcoin came about, it has to serve as an alternative to the current fiat currency. Bitcoin has been a currency for quite a while now. Crypto exchanges use bitcoin as reserve currency, more and more businesses are accepting bitcoin for various transactions, public has become more aware of bitcoin. Mainstream public, even if they don’t understand the blockchain technology, their understanding of bitcoin is a digital currency.
That brings us to present. Ironically, brilliant alternative to the modern financial system that was born as a result of financial crisis is having a crisis of its own. We are living in the most important month of bitcoin’s life. Miners, users and Jihan Wu are playing with bitcoins destiny with their ideaological wars. We will have to see how Segwit2x, UASF BIP148, and Jihan’s hard fork will play out. Will bitcoin be able to keep its status quo? will it split up into multiple coins? Nobody really know the answer to these questions, everybody is sticking to their idealogical believes and it doesn’t seem they are bluffing.
In my opinion, it would be best if everybody let go of their idealogical differences and kept bitcoin unchanged the way it is. That way bitcoin would remain dominant store of value and a reserve currency. Any issues stakeholders might have regarding the tx fees, scaling, etc would be none-issue if another crypto was designated as everyday use currency.
I don’t think fees miners get too high compared to the current financial systems we have, I don’t think transaction time is unreasonable, still beats the bank transfers. The only problem is when you would use it as an everyday currency. I don’t think waiting 10 or so minutes is reasonable for everyday currency transaction. But many experiments have been done, we have so many different alternatives now. Another crypto, that can provide speed in transactions can take over that function. In this regard, I wouldn’t want to see bitcoin as a currency.
As @thecryptofiend mentioned:
That will put in danger crypto-technology's intent of being an alternative solution for the world financial systems' problems. That is why I believe that would have effect beyond cryptocurrency world. We will have to see where the internal bitcoin community wars will take us this August. I can just hope bitcoin will remain as one and unspilt entity.
In conclusion, for the reasons I have provided, I think bitcoin should keep the role of reserve currency and let other, more efficient cryptos take the role of everyday transactions currencies. As far as bitcoin as a store of value, it is its DNA and it should remain as such. Risk of changes to its DNA via hard or soft forks can undermine bitcoin’s future as dominant store of value crypto-asset.
Thank you for this discussion. I think it is right timing for this kind of discussion. Although most of us won’t have a say in what will happen, everybody who has stakes should take necessary preparations to protect their assets.
Wow - a very well thought out and constructed response.
thank you
YES, it should. Becoming a medium of exchange of value and enablement of trade in small to large value will give an option of currency not controlled by or manipulated any government.
Thanks for this debate @thecryptofiend. Bitcoin should focus on being a currency because, it is the currency that broke the barrier which so many from the Third World suffered. Bitcoin as a store of value is not very important because it has no real value on its own. It's just a medium of exchange that posseses no real value, unlike gold and silver.
Bitcoin is better just as a currency.
Excellent point!
Thanks you.
I couldn't agree with you more that we should focus on making bitcoin a form of every day currency. I think a lot of people are treating bitcoin as a hedge investment like gold. Their plan is to just hold on to it and never let it go.....If it goes main stream we need to adopt it more as a normal form of currency. I also think the future of blockchain isn't just in currency. The sky is the limit.
People used to send their letters via post office after paying for tickets. Similarly, people now use banks for money transaction and bank charges them. The way people shifted from post office to Emails which is free of cost and much faster, in the same fashion, people will opt for bitcoins in near future. So what I think is that bitcoin is a future currency, the way, we can't touch our emails but still it fullfills our purpose same as bitcoin doing, we cant see it or physically touch it but if will fullfill our needs much efficiently.
That's true but bitcoin will need to keep evolving in order to scale and right now it doesn't seem like the community will allow it.
Indeed.
All right let's keep it simple.... As of July 1st 2017...Australia has officially confirmed it will treat Bitcoin “just like money” from this year and it will no longer be subject to double taxation.
In its budget summary for 2017-18, the government states that as part of its plan to “make it easier” for digital currency businesses to operate in the country. It will ensure that nowhere in the supply chain is general sales tax (GST) paid more than once.
“The Government will make it easier for new innovative digital currency businesses to operate in Australia,” the summary reads.
Bitcoin traders and investors will not be taxed for purchasing and selling Bitcoin through regulated exchanges and trading platforms.
Over the past two years, the Australian Bitcoin exchange market significantly fell behind growing markets such as South Korea, Japan and South Korea, that control more than half of the global Bitcoin exchange market share.
Two majors factors which drove startups, exchanges and businesses dealing with Bitcoin and other digital currencies in Australia away from the country where the termination of banking services by leading Australian banks due to their anti-competitive nature and the double taxation of Bitcoin trading by the Australian government.
More importantly, the Australian government’s new vision to spur the growth of fintech and the digital currency market would most likely prevent local banks and financial institutions for unfairly denying banking services to Bitcoin businesses and exchanges.
It's called Bit"coin" for a reason so that it can replace fiat currency.
I was not aware of those developments in Australia - thanks for letting me know.
Hopefully you deem my answer worthy... If more governents follow Australias example then all crypto currencies would go to the moon.
I am pleased l found your comment! I am an Aussie and only found out about bitcoins last week, and got approved for steemit yesterday :-)
I best be reading the new budget... So much to learn..
Glad you spotted this although I'm not Australian(don't hold it against me ) I too am new to crypto currency and made a post 2 months ago about this...
https://steemit.com/bitcoin/@mithrilweed/australia-to-recognize-bitcoin-as-money
I then kept using google to track down more info on what your government is doing with Bitcoin... seems like they are finally getting their game together.
I also checked your profile and see that you've not made any posts Here's some links that may help... https://www.steemithelp.net/
https://steemit.com/steemit/@igsamuel/how-to-succeed-on-steemit-quick-guide-for-beginners
Thankyou so much for the links, my brain is overloaded with info lol..I will set up my profile today.. It was 2 pm last night when i was reading this post..oops :)
I am looking forward to being a part of this community that can teach me so much... Thanks heaps mate :-)
Store of value and Currency both go hand in hand, I believe once there is mass adoption and scaling issues are resolved ,the extreme price fluctuations will stop!
Yes I think the same.
Hey @thecryptofiend
Last night I had a discussion that touches on this with some friends who don't know anything about cryptos.
They wanted to know why there are so many different ones when there is BTC and what's their point.
The way I see it is that BTC already is the reserve currency of the crypto world and it functions as an entry point into all the others. I agree that bitcoin should be kept as lean as possible and leave all the non fundamental functionality to the other cryptos. As the market matures there will be a time when BTC won't fluctuate as much as now and then it will enter its true stage of a store of value. Going forward I don't think we will see real life micro payments in BTC, maybe salaries, but for buying a soda it will be one of the younger cousins doing the heavy lifting. It's possible that all this will be happening under the hood, Joe will get paid in BTC but when he uses his XFastCard in a store, a conversion to XFastCoin will take place instantly and the payment will be done through its nimbler network all without Joe ever knowing this.
I think the "reserve" currency is a good way of describing it!
Hey @thecryptofiend any update?
Yes I have just posted the results here with a new announcement:
https://steemit.com/competition/@thecryptofiend/steem-competition-winners-announcement-and-new-competition
Thanks for the update man
Good post, Thanks for all this info
Download Udemy Courses for FREE!:
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This comment has received a 0.09 % upvote from @booster thanks to: @hamzaoui.
The Way we transact is being changed rapidly. Indirectly we have started using Digital Money Since 2000 using the Mobile APPS of the BANKS. But This is a Breakthrough at the top of that Step. That is WHY, Of Course, A BIG YES !!!
Many people think that the Bitcoin craze is overhyped. Bitcoin is volatile gold for investors, George Mason University study found that 60% Bitcoins were exchanged through a gambling service. So many people do not trust Bitcoin @thecryptofiend
It's not that people don't trust Bitcoin. People are conditioned to believe that virtual Federal Reserve Notes are money.
True but I don't think those people understand what it is or indeed what they are talking about.
Bitcoin is stabilizing at a remarkable rate. It is estimated that if the volatility of bitcoin continues to subside (halving every 4 years), it could be as stable as the Euro in less than 10 years, then it can be treated both as currency and store value.
Bitcoin is only stable because the market is manipulated by people who own hundreds of thousands of them, with trading algorithms you can make sure that the price always stays within 1% of itself , or you can sell 50,000 of them, initiate a market panic and then rebuy when the price has fallen 12%
In my opinion BTC should have a role as cryptocurrencies' gold and therefore be a store of value primarily. Its' popularity as the mother of cryptocurrencies and its limited availability make it good for being so. I think we should leave bitcoin as it is and honour it for what immense new possibilities it has opened to the modern world.
When it comes to cryptocurrencies used for widespread daily use I think we will see some other currency making the race. That other currency could likely be backed up by bitcoin, but I do not think it will be Bitcoin itsself.
Yes it is possible.
Bitcoin is just a gateway currency allowing us to exchange fiat to other cryptos that are much more useful and pratical than Bitcoin. It is a flagship of currency for only that solo reason. In my humble opinion Bitcoin should remain a currency only to the moment of high development platforms of other cryptos and more efficient ways of exchanging fiat to them.
Next big thing is mass adoption of blockchain in the mainstream. After all that happens more people from the IT and common users and investors will join this huge project thus allowing more stable markets and decline of Bitcoin as a flagship and whirlpool of every other cryoto on the market.
Summa summarum, Bitcoin should remain currency only to that moment. @thecryptofiend
Thanks mate. I think you are right.
Well, I'm pretty clueless about cryptos so I'll just stand next to someone like you, point and say, "what he said!" but I did read the whole article and didn't upvote my own comment!
@cathi-xx
When you go to sleep tonight, I am going to get on your computer and use your account to Upvote your own comment to disqualify you from the competition, unless you cook me a delicious roast dinner! Also you can't trick me with that roasted celeriac nonsense again, I want 100% GENUINE Roasted Potatoes with no surprises hidden within those potatoes.
You have been Warned!!!
That was good for a chuckle @cathi-xx so I'll upvote your comment, just a little though ;-)
♦♦Bitcoin Is An Asset, Not A Currency♦♦
Over the past year and a half Bitcoin has been on a spectacular run, rising in value 140% in 2016 and now an additional 49% in just the past month. This surge in value has invigorated Bitcoin backers convinced this boost in value makes Bitcoin a more credible currency, that it is a sign of the cryptocurrency’s strength. Yet the wild swings, both up and down, in the value of Bitcoin do not make it a more plausible substitute currency; they make it a speculative asset, a get-rich-quick scheme.
Is Bitcoin the currency of the future? No. There are two big problems with bitcoin as a currency: its value is unstable and its transaction processing is too slow.
The most important feature of a currency is that it be a stable store of value. This credo, ably explained by Steve Forbes here (among many places), is vital for a developing country economy to attract the investment it needs. Even in developed countries, as John Tamny explained here on Forbes.com, a stable currency value is the key to investment because those who invest are expecting a stream of future earnings to earn back their investment plus some profit. Instability in currency values mean that an investor cannot accurately predict the value of those future earnings. This uncertainty makes investments less valuable; thus, less investment happens.
Over the past month the value of a Bitcoin has experienced an average daily change of 2% in value, sometimes down but mostly up. For comparison, over the same month, the exchange rate between the euro and the U.S. dollar had an average daily change of less than 1% and only changed 3% over the entire month. While Bitcoin was rising 49% in the past 30 days, it had seven days where its value changed by over 3%, more than the value of the dollar changed in the entire month. People don’t want investments or debts denominated in a currency whose value can change by 50% in a month.
Another basic feature of a currency, beyond being a stable store of value, is to facilitate transactions. Barter’s big drawback is it is inconvenient. It’s hard to make change and you must find two people who want to exchange goods; three or four way trades get complicated. Currency solves those problems meaning I can buy groceries without having to sell economic services to the supermarket. This convenience is why people moved from barter to currencies (and then from metal to paper, from paper to plastic, and from plastic to electronic bits).
Yet, to protect the security of the blockchain that makes cryptocurrencies like Bitcoin so secure, processing of Bitcoin transactions is very slow. In fact, because of a limit on the number of transactions which can be completed in a day, it sometimes takes days to complete a simple transaction. Resistance to changing these rules from people who mostly like the anonymity and untraceability of Bitcoin mean that Bitcoin cannot become a widely-used currency. Its very security negates its value in everyday use.
Given these drawbacks, the only reasons to own Bitcoins are not to use them as a currency, but to either speculate on their asset value or use them to shield transactions from others. Without a stable value Bitcoin cannot truly be a currency. Rather it is a commodity asset that one trades, like gold or silver, in hopes that its value will rise and yield a trading profit. There is nothing wrong with speculation; the actions of speculators help to add market liquidity and to determine the market value of assets. However, usually the asset being valued also has an actual underlying use: you can invest in gold or use it to make jewelry or electronic components. Bitcoins have no uses other than allowing people to hide wealth, conceal (often illegal) transactions, and make and lose money by trading them.
Clearly, from the popularity of Bitcoin, those limited uses still have quite a bit of value to a nontrivial number of people. I have no objection to these people’s use of Bitcoin for those purposes. However, people should stop expecting it to become a currency that ordinary people use for ordinary transactions. It is destined to stay in its niche as a way to hide things or speculate. A currency, Bitcoin is not, nor shall it be
Too bad most of it just straight from forbes :(
https://www.forbes.com/sites/jeffreydorfman/2017/05/17/bitcoin-is-an-asset-not-a-currency/#7cdb8f3a2e5b
nice catch
lol, was pretty obvious, lmao!
you wrote a freaking book...
Its CONTEST for 500 sbd 🏆
LOL it's 500 delegated power look closely.
No it is 500 SP I will add it to the person's account. Don't want to delegate.
Thats means it's aprox double in value
Which i think
If you know how to use it correctly, that's a lot of value :) Definitely worth an entry!
then let the games begin!
Good LUCK ✌🏽✌🏽✌🏽✌🏽🏆🏆🏆🤝🤝
You just copied and pasted this from Forbes as @arckrai pointed out.
Yeah, Lets make Bitcoin a money(store of value) and add cables like Eth and LTC to function in unison as a single channel to create a proper, contract/currency/money system! Block tree anyone?
There is no reason not to make bitcoin a currency. The whole world is already using it.
eh....i wouldnt go that far
No. Get rid of it. The technology is outdated and it is slowing down the evolution of crypto currencies. It will forever be known as the first crypto currency but it has since been superseded by technically superior coins.
Controversial opinion:)
I know :) hopefully I didn't offend any Bitcoin holders
Maybe I am far from giving the most favorite comment but still, because I strongly believe in my opinion I'll give you my answer, an answer of a beginner in the cryto world. I want to say that what Bitcoin gives us is the future that we always missed, for the first time, a method for a user of the internet to transfer a unique part of his digital property to another fellow, in such way that the transfer that he did must be safe and secure.
Well, it is a currency and a store of value just like anything else. Take gold for instance, it is "just" a way to store your currency outside of the fiat system. Now with that being said, anything can do this as long as everyone has faith in that item. I mean what is the dollar? It's a fiat currency and beyond that a debt note. Really it's a piece of paper with a number and a dead guy on it. Put a one dollar bill next to a hundred and they're the same size only a different number and face but it's backed by the faith people put in it.... oh and the US military ;) So should bitcoin be a store of value or a currency? Well ,IMO, it is both and should be both. Can you really have one without the other? People in other countries want the US dollar because it buys so much more than their fiat paper. A better store of value for them if they bought with their fiat at a time when it was cheaper to do so. If I had to choose one I'd choose store of value over currency as there are plenty of currencies out there to use and at some point they all fail. The life span on currencies is around 40 years so the $dolla$ dolla$ bill is over due. I like the idea of both but if I had to choose one the store of value should at the very least protect one's wealth and when they need the currency of the day they'll sell the store of value to use that currency.......... so for me "Store of value." Thank you. Enjoyed commenting.
Thanks for adding your thoughts!
It should be BOTH @thecryptofiend .. Bitcoin just got legalized in Australia.. with the public blockchain technology associated with bitcoin and Segwit being implemented for faster transactions.. I see bitcoin serve both the above mentioned purposes. Even Blockchain Canada are implementing a new technology for the bitcoin ecosystem. Then we already have RSK Labs bringing in smart contracts to bitcoin. Smart contracts will replace lawyers. Blockchain technology has use cases in practically every single sector of commerce. So bitcoin is much more than just a currency or a store of value.. it can be the beginning of a whole new economic revolution.
That is kind of my point though. Every further complication we add to bitcoin detracts from it's primary purpose. It is already having problems functioning as a currency and people are trying to bolt on other things. Anyway I have to leave for Manchester now will answer more when I get back.
I do not think Bitcoin will be considered as a store of value as the vast majority of the global population believes only in gold , silver and precious stones , as it has proven over the ages to keep there value as hundreds of fiat currencies has perished .
Bitcoin is already a currency as it is recognized by all those who own and want to own it, and its being used and accepted as a medium of exchange .
The world population was estimated to have reached 7,500,000,000 on April 24, 2017. If you take the percentage of crypto users and believers on that figure there is still a lot to do in marketing and explaining what digital currency is, as i am pretty sure there is a couple of governments that would not want this to work as they will not be able to collect Taxes as they used to do .
But the future looks bright in crypto and I am so glad I saw this opportunity.
Good points. I suppose ultimately you can't make anything out of bitcoin in the physical world.
I would say bit coin is more of a currency than an asset. Assets like gold and real estate fluctuate in value much like bitcoin is doing now but you cant readily trade gold or real estate for other goods or services. Bitcoin can be readily traded for anything, hence it is a currency.
Good point.
Should Bitcoin Just Be a Currency or Store of Value?
That is not an easy question but I think that the answer is no. I am sure Bitcoin is a great invention and it is very sofisticated software but there are lots of better coins that has potential to break leading place of btc. It is carrying some kind of obsolescence, too. Small blocks, bigger transactions (because of a big size of signature), (about) 10 minutes confirmation time, now the high transaction fees. In my opinion, bitcoin is really going to be replaced by "smarter" coins. It is happening right now. I remember that about 6 months ago the bitcoin dominance was more than 90% but today bitcoin has even less than 50%. Also according to this decreasing trend it is quite risky to invest just in bitcoin to long-term period of time (Even if the price was really increasing in last months). I have the courage to say that one day many coins are going to be more expensive than bitcoin. For daily using (shopping, etc.) the bitcoin is not a good option (I would rather recommend for example PIVX) unless it will be improved (built-in lightning network, smart contracts, instant transactions, bigger or flexible size of blocks, ...). If you want to store value in cryptocurrencies i would recommend you spread your money into many "good-looking" coins and HODL.
If it stops moving downward then it can be considered as a currency.
No currency in history has completely stopped moving downwards. They all go up and down.
I think it is currency but also store of value; however, it is highly volatile. I think there should be 2 or 3 more currencies like bitcoin.
The volatility will go with time I suspect.
In my opinion it should be a store value currency. Although to make this happen and good for stores it should maintain a steady grow. If the currency doesn't have a steady grow the stores won't pick it up because it's with too much risk.
Next to that I don't think bitcoin should be the only coin. Take litecoin for example, this can work as well. But with introducing cryptocurrencys as a payment method there should be strict guidelines for it. and with strict guidelines the growth would be way less.
So there are pro's and con's ofcourse, but in my opinion it can work!
Good luck with your contest, I'm gonna follow to comments!
Yes growth certainly helps - I'm not sure how steady it can be though, it is still relatively small.
Yeah exactly that. And since it's small the big company's won't take it as a payment because it's still a risk. I do hope cryptocurrency's get into the real world and get accepted as payment!
Bitcoin should be store of value because the whole discussion about the blocksize would end. So anoying.
Well hopefully it is ending anyway or at least will be less of a problem after Segwit 2X.
Well, yes, Bitcoin should be like gold, just a measure for the remaining tokens.
Yes personally I like the gold analogy better than digital money.
It should indeed be both - and it must (remain) decentralized, unregulated. Let the people/market decide how to use it.
However, reality is different. 70% BTC of the market is mined and controlled by the Chinese government - who are no friend to free market and independence. The US government funds a special organization within MIT that will lead to a coin split within 2 months due to the implementation of a softfork. There goes BTC? I don't know.
The most important aspect for me is, keep governments out of peoples business. Period.
😎
It's not the Chinese government though unless you have some information to back that up?
Good article, btw. I base some of the info on this article by @clearshado, although my number is actually wrong. According to this, 70% of mining equipment is Chinese. A much greater percentage is the stake of Chinese exchanges in BTC.
The rabbit hole is deep. I don't claim to understand it all - and this is due to the fact that data are missing. The more data we have, the more accurate the conclusion we can draw.
How's Manchester treatin' you?
It was awful. Roadworks got me stuck having to make a massive detour. Was dawn by the time I got back and absolutely exhausted!
Main thing you're home safe !!!
Happy Independence Day Weekend!
🦅
Same to you mate! Now I just have to gradually make it through all these comments!
I know - good thing to do - :) And now you have two accounts to mend... Woohuah... Bizzy
"Should Bitcoin Just Be a Currency or Store of Value?"
I think bitcoin should try to maximize their utility in any way it can. That means trying to build different platforms and utilize blockchain in many different ways other than just a currency to store value.
The issue is when bitcoin does a poor job when trying to utilize blockchain in different ways. Then it just makes things worse if a poor job is done.
But it is having trouble with scaling as it is. Doesn't adding more things to it just make the situation worse?
Trouble scaling its use as a currency around the world you mean? For that i think its doing a good job actually, Australia is making it easier for cryptocurrencies, Japan, other countries as well. Its only the start.
If adding these things are done in a poor way then yes it'll hurt them more than anything. If they are executed well then it can only add. Its like an empire - if we add more land and its managed well then do it if not managed well then empire will fall.
Our definitions of good job must differ then!
I respect that you still upvoted me even though they may differ! :D
I believe the only true store of value we have on this Earth is gold. All other sources are a step below that. With that said, I do believe bitcoin has the same ability to be a store of value as any fiat or national currency. The limited supply of bitcoin helps, and the fact that it has the ability to be used worldwide.
Gold would appear to have the full package in many respects but transportation and security are both problems. I suppose nothing is perfect.
I just wrote a recent post on the use of blockchains for government accountability, so this is a fresh topic on my brain. I think that using BTC just as a store of value is a waste of its potential. The blockchain technology is fantastic for financial transactions, but simply looking at BTC (or any other cryptocurrency for that matter) as a store of value or a currency is just looking at the tip of the iceberg. The largest portion of an iceberg is under the water. Likewise, the greatest potential for BTC lies in the mechanism that produces the currency. Not in the currency itself.
True but I think Bitcoin's position means that making any significant upgrades results in the kind of stalemate that we saw for the last 2 years and it will need to keep evolving technologically if it is to keep up with the demands - particularly if more features are added.
The answer is not as simplistic and dualistic. Bitcoin is much more complex. It is both technology and social phenomenon. It already is a currency and will stay this way, and it should also be a store of value. Most importantly, it is social experiment in freedom.
You are good example of this freedom Mr. Thecryptofiend ;-)
Without it, there would be no Steemit, and you would probably not have a chance to express your true creative writing potential and taste the freedom of being in control over your future.
But I agree that there is no point on building crypto projects on its blockchain on it (like counterparty). There are other cryptocurrencies built separately that can offer solutions and concepts that bitcoin lacks, like Ethereum for example, etc.
Yes but that kind of makes the point that Bitcoin doesn't need to be all things to all people - we have other cryptos to do specific things and do it better.
I agree. In does not and should not :-)
I think it should be a currency since it is already widely accepted by the general customers of internet activities so it should remain in it's current state
It already is both. I would prefer to describe it as a settlement unit of value.focusing on one thing sometimes it's more productive. By being a settlement unit keeps both uses, a short term currency with a long term of stored value.
You just have to be wise when you spend it I guess
I'm no expert but I can't see how it can be a store of value . I see it as a form of digital fiat. Cheers for your article mate very interesting.