Bitcoin isn’t a currency – and unless it becomes one it could be worthless

Bitcoin is in decline. Not the price, which has risen 900% this year and (at time of writing) stood at US $ 12,000 per unit, but the actual use as currency. And this makes a rapid appreciation is all the more puzzling.

A few years ago, winning fans along the announcement of the business has started accepting Bitcoin. Over the past few years, it has become a rare announcement. Instead, the business has ever received the currency has started to drop.

The BBC contacted ten businesses in London are ever advertised accepting Bitcoin. Four no longer accepted, and the two who did said they almost never received payment in Bitcoin. The same is true even online. The Wall Street Journal, quoting a report by Morgan Stanley, recently reported that Bitcoin is now shared by only three of the 500 online merchants globally, down from five years ago.

If the growing adoption as currency can not justify the rapid appreciation of Bitcoin is, what can? Many fans have already started promoting the idea of ​​Bitcoin as a store of value. In economics, this is usually defined along the lines of “items that could be used to transfer purchasing power from the present to the future”. In simple terms, it is a safe place to invest your wealth that will not lose its value over time.

Apples can be used for barter services from neighbors while they are still fresh, but their purchasing power will be lost as they decay. Purchasing power can be maintained into the future with apple exchange for cash, gold, government bonds or other stores of value.

Some items have attributes that make them a better store of value than others, whether we are talking about physical or digital object item Gold is a good store of value because it is durable. bond certificates are also durable electronics for the bank system has not failed, and has the added benefit that is easier to secure valuables rather than physical. Money, both physical and cash currency digital Bank, has the advantage of being very liquid, making it easy to convert into a purchase when needed.

Bitcoin does not share many of the attributes of a good store of value. It also offers a high-potential level of financial privacy, somewhat similar to the offshore banking system. This is an important attribute of a store of value for most people, although it also creates a lack of accountability and the potential for tax evasion.

But the most important attribute of a store of value is that it is worthwhile. Gold is valuable because it has many industrial and decorative uses. prices can fluctuate due to speculation in financial markets, but can never fall to zero. There will always be someone willing to accept gold because it is a useful commodity.

Similarly, US government bonds ended up valuable because they give the owner the right to a relatively secure flow of interest payments. The dollar and euro valuable because they are widely accepted as a means of payment, and will continue to be so in the future. Instead, the future acceptance of the Venezuelan bolivar in doubt, so that people are desperately trying to turn it stores better than value.

Do Bitcoin worth? Does not have any industrial or decorative purposes, and does not give the right to receive interest. It was meant to be valuable as currency that is accepted around the world, but it does not seem to happen. The only value now is a major Bitcoin exchange rate. Many people are willing to pay a lot of money today to get some Bitcoin.

But what they get for their money only hope that other buyers down the line will pay more money for coins. After the music stopped, there is no fundamental value to prevent coin prices fall close to zero, save for their weak position as the currency of choice in drug trafficking and gray-area of ​​online gambling.

Leave a Reply