, 3 years ago
While some consider Bitcoin to be peer-to-peer electronic cash, others believe that it is more of a store of value. So, what is it, digital cash, digital gold or both?
The Bitcoin whitepaper which was written by Satoshi Nakamoto, the mysterious inventor of Bitcoin, states that BTC is peer-to-peer electronic cash. This indicates that Bitcoin was meant to be a medium of exchange.
And in fact, it can be used for payments in thousands of stores and online platforms. With the emerging use of the Bitcoin network, it became clear that its network can only handle a certain amount of transactions.
Meaning that regular payment options like VISA for instance can handle more transactions per second. At the end of the day, Bitcoin is more secure, it is peer-to-peer, but it lacks behind credit cards and wire payments.
Another feature of Bitcoin is the fact that it is considered hard money. Meaning, that there is very low inflation over time and a fixed hard cap with about 21 Million Bitcoin that will ever come to existence.
One might believe that gold or other precious metals have still an advantage because they are more established, but studies have shown that especially younger people are more likely to trust Bitcoin instead. And they have very good reasons to do so.
While gold and silver seem to be scarce, real scarcity is only achieved with Bitcoin. There are still tons of gold and silver produced each year. In fact, it’s getting more and more. Only a very high demand can drive the price.
One problem is that a store of value becomes useless if nobody is willing to exchange it. Meaning that there needs to be some sort of trade in order to become a store of value in the first place. In this sense exchange is a requirement for value.
If there is nobody that is going to buy your Bitcoin it is useless that it is very scarce. Scarcity alone is not the driving factor. It is the fact, that people use it for a variety of purposes that’s adding value among the fact that it has a strictly limited supply.
So, yes, Bitcoin is a store of value, but it is also a medium of exchange and both are necessary for its success.
May 23, 2023
Bitcoin is the first cryptocurrency ever to be invented and it introduced the blockchain technology. It gave birth to a whole new area and this is the very reason why there are so many events in its past that are considered to be memorable or important.
Apr 27, 2023
Many economists see money as a human invention that followed barter. But according to anthropologist David Graeber, in his book Debt: The First 5,000 Years (2011), it is not the case that we first bartered eight chickens for a goat and then invented money. No, debt existed before it all. What does this tell us our financial system and about Bitcoin as an alternative?
Feb 10, 2023
As the original cryptocurrency, Bitcoin has the longest price history of them all. What do more than thirteen years of data tell us about the future price of Bitcoin? And what other indicators help us to predict Bitcoin's price? Let's look at some models and other considerations when we want to create a Bitcoin price expectation for the coming years.
Jan 18, 2023
On the surface, Nostr is much like a stripped-down version of Twitter. But just like Bitcoin works in fundamentally different ways from traditional money, under the hood Nostr works very different from conventional social media. In Nostr, YOU own your account. Also, Nostr lends itself to integration with wallet software and Bitcoin's Lightning network. Let's dive in and experiment.
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