Fiat and Traditional Finance Alternative

• When I first learned about Bitcoin, it was called Crazy Internet Money. This less than attractive description had at its core a belief that people who invested in Bitcoin were crazy.
• Some would say ”crazy like a fox” who landed a job in the hen house.

Alternative Currency

We have all seen the arguments Pro or supporting, and Con or against Bitcoin being a good replacement for currency, as a store of value, medium of exchange and unit of account.. In this post I take a look at Bitcoin and compare it to the the core characteristics of ”Currency”..

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Unit of account

• I think most of us have read or heard derisive or insulting statements essentially saying that the only good thing or thing of value about Cryptocurrency is the Blockchain, because it’s the best ledger, record or ”Unit of Account” the world has seen.

Medium of Exchange

• While many economists, investment advisors, and journalists say that Bitcoin buyers buy and hoard Bitcoin, not spend, if you Google Ways to buy stuff with Bitcoin” you will get thousands of hits. And if you filter them by age, you will clearly see and increase in articles as you get closer to our current year,, sorting them by year.
• This is a clear, numeric data point which clearly supports the premise that people are using Bitcoin to buy things.
• In fact, there are over a dozen economies using Bitcoin, or more accurately Satoshis as the medium of exchange.

Store of value

• This is I think, the trickiest to grasp. After all, how can something as volatile as Bitcoin be a store of value?
• The answer may surprise you. In economic terms, or more clearly stated, in mathematical terms, a store of value simply has to buy more goods in the present than it did in the past.
• Okay, let’s look at Bitcoin and see if it does this.
• Looking back at Bitcoin:
  Initially Bitcoin use to buy a few dollars worth of goods..
  Later it bought tens of dollars worth of goods..
  Then later it bought hundreds of dollars worth of goods..
  And now it buys thousands of dollars worth of goods..
• Hmmm you should see a pattern here.

• Perhaps you do, perhaps you don’t or perhaps you’re thinking… that’s not true.
  Bitcoin buys more today, because the Insert your currency here” buys less.
• If you’re thinking this your right.

• So now ask yourself, what do you want in your wallet? Bitcoin ? or your currency?

Bitcoin

• Medium of exchange
• Unit of account
• Store of value

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@shortsegments

About @shortsegments

Shortsegments is a writer focused on cryptocurrency, the blockchain, non-fungible digital tokens or NFTs, and decentralized finance for over fiveyears.

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