CoinMetro CEO Labels Bitcoin as a Non-Currency, But Still has Value as an Alternative
It is very hard to get one's head around what Bitcoin actually it, not only for laymen, but even economists are facing the same problem. Is it just a mechanism for P2P value transfer, does it have inherent value or is it a currency? Before we look at this problem in detail, let us take a look at what gives currency its value.
If you tried to pay for goods with a piece of paper, you will be laughed at; unless the paper is an acceptable form of currency. To understand why civilized societies have used currency throughout history, it’s useful to compare it to the alternative. Imagine you make shoes for a living and need to buy bread to feed your family. You approach the baker and offer a pair of shoes for a specific number of loaves. But as it turns out, he doesn’t need shoes at the moment. You’re out of luck unless you can find another baker—one who happens to be short on footwear—nearby.
Money alleviates this problem. It provides a universal store of value that can be readily used by other members of society. That same baker might need a table instead of shoes. By accepting currency, he can sell his goods and have a convenient way to pay the furniture maker. In general, transactions can happen at a much quicker pace because sellers have an easier time finding a buyer with whom they want to do business.
Does Bitcoin Fail To Be A Currency?
Bitcoin fails to be a stable store of value and a very effective medium of exchange. The instability of Bitcoin is the chief contributing factor to this. 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.
Currency Of The Future?
Satoshi never intended for Bitcoin to replace fiat currency overnight, but to be iterated to adapt to the current scenario.
“It has the potential for a positive feedback loop. As users increase, the value goes up, which could attract more users to take advantage of the increasing value.”
Once Bitcoin solves its problems of scaling problems and when the markets get stabilized Bitcoin will be set to be launched into the mainstream. Even the regulatory hurdles are becoming better as time passes. It is important to remember that we are just 10 years into seeing this esoteric product. People need some more time for this esoteric product to be infiltrated by into the popular culture.