Controversial statement. The functional value of money lies in 3 things:
– Accounting tool
– Medium of exchange
– A store of value
An unnecessary thing, even in a limited supply, will have no value, and even more so – a tendency towards an increase in demand for it.
As a medium of exchange and as a means of accounting, bitcoin is not suitable due to its limited performance and high volatility, which hinders its mass adaptation. Accordingly, if functionally it is useless, it is naive to hope that it will serve as a store of value, which could grow due to its limited supply.
The author of the note writes: “In fact, you have described the functions of money – a measure of value, a medium of exchange and a means of accumulation”.
And all functions Bitcoin can and actually does in its ecosystem
For operations with large amounts over long distances, performance is not critical. In addition, Bitcoin add-ons such as Lightning Network, etc. able to solve the performance issue.
Bitcoin volatility is a growth pain. With mass adoption, it will drop significantly. In addition, the long-term trend in the value of bitcoin is upward and this makes it a good vehicle for accumulating wealth, i.e. Bitcoin acts as a serious competitor to gold. Bitcoin to monero exchange online can earn you money. By the way, operations with gold are much less productive and, nevertheless, it is the best store of value in our time.
In addition, bitcoin, as a unit of account, has all the properties of money – divisibility, homogeneity, immutability, resistance to counterfeiting, small inflow (limited emission), etc.
And if we add here the censorship resistance of transactions and the absence of a single center of control Bitcoin Evolution, then Bitcoin becomes the ideal monetary system of the 21st century.
It should be noted that bitcoin has been a bearer of value for almost 10 years, and it has grown during this time from a fraction of a cent to thousands of dollars. Therefore, there is no naivety, but there is a pragmatic calculation, supported by the backgrand (the Lindy effect) and the growing network (Metcalfe’s law) of the first cryptocurrency.
The fact of the matter is that there will never be mass adoption, due to this very productivity and, oddly enough, limited supply. Because, as you may have noticed, the two properties of money — a medium of exchange and a store of value — contradict each other.
As Lietar Bernhardt writes in his book “Rethinking money” about the paradox of money in economic theories: “ no one ever wondered HOW the main monetary instrument can play these three roles simultaneously, ignoring the fact that they contradict each other!
For example, a medium of exchange fulfills its functions when it is available and there is enough in circulation. A store of value, on the contrary, is in short supply and is mostly excluded from circulation. Classical economists have never divided monetary architecture into its constituent parts. For this reason, this area is absent from the works of the leading economics luminaries. ”
I would not compare Bitcoin to gold
Capitalization of all cryptocurrencies for today cryptocurrencies: $ 189 billion