Is bitcoin a good form of money?

It is no secret that the Bitcon Code application has fed the imagination of many people around the world. This is probably due to the recent rise in the value of Bitcoin against the US dollar. In addition, many merchants have announced their plans to integrate Bitcoin as a payment method in their stores.

However, Bitcoin is still largely unregulated, with most people accessing it via cryptocurrency exchange platforms such as the Bitcoin System. In essence, this cryptocurrency does not have a central regulator. Therefore, you remain vulnerable to speculative trading and volatility. As a result, some still believe that criminals can use it for illegal transactions.

Some countries have even warned their citizens not to accept or use Bitcoin. In other countries, such as China, using Bitcoin is illegal. At the same time, El Salvador entered the history books as the first country to introduce legal bitcoin. But is this virtual currency any good?

What is Good Money?

Some experts argue that good money retains its purchasing power for short periods. This means that people can use it to buy the same amount of goods or pay for a similar service. The stability of the price level of a commodity depends on the supply and demand for money.

But bitcoin advocates need a limited supply. Therefore, the availability and circulation of Bitcoin should be free from political manipulation. However, the strict cost of the Bitcoin supply cannot respond to the fluctuation of demand. Therefore, the demand for it fluctuates significantly, as well as its value.

Bitcoin Basics

Bitcoin works like traditional cash. People can buy or sell bitcoins on cryptocurrency exchanges. In addition, this virtual currency serves as a payment method for services and products, and many companies accept it.

People transact with Bitcoins by sending tokens to the accounts they want to deposit. After the transaction, the Bitcoin network broadcasts the transaction details publicly. This network contains miners or people who verify Bitcoin transactions using computers connected to the network.

A Bitcoin transaction remains pending until most network participants verify its authenticity. Therefore, bitcoin miners verify transactions as a central authority would do with traditional banking transactions before confirming them. After verification, the block containing the transaction details is transmitted to the blockchain. The network continues to decode another block of transactions.

Bitcoin users generate a new address for each transaction for the purpose of anonymity. However, anyone in the Bitcoin network can access the public blockchain and keep track of account balances.

What makes bitcoin a good money?

Satoshi Nakamoto envisioned Bitcoin as an alternative to traditional payment systems. The goal was to have a payment system that facilitates cross-border transactions without intermediaries. Therefore, the anonymous creator of Bitcoin wanted a payment system free of interference from central banks, governments and other sovereign entities. Moreover, Bitcoin will be free from alleged exploitation by governments and financial intermediaries such as banks. But has Bitcoin served its purpose yet?

  • Bitcoin as a medium of exchange: Bitcoin must function as a medium of exchange to be a strong money. Today, many merchants take bitcoin in exchange for services, goods, and other resources. Thus, it fulfills the purpose of money.
  • Bitcoin as a unit of accounting: People derive the use of Bitcoin as a unit of account from their intermediary of exchange. Therefore, anyone paying with Bitcoin should have the tokens they want to spend in their digital wallet accounts.
  • Bitcoin as a Store of Value: Many people buy Bitcoins and store them in their crypto wallet, waiting for the price or value to rise and sell them later for profit. Therefore, Bitcoin is a store of value and an investment tool.

parting shot

Bitcoin is a good modern currency. However, its adoption and acceptance is still at an early stage. Therefore, it takes more time to achieve the initial goal of Satoshi Nakamoto. (Press note).

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