Ever since Bitcoin’s rise in December 2017, economists and the financial industry have explored the question of if Bitcoin actually is currency. There are three properties of money that economists use to classify something as currency: store of value, means of exchange, and unit of account.
All three categories are debatable for Bitcoin. However, I would argue that the cryptocurrency has store of value and means of exchange. There is nowhere you can put your money currently that will grow as fast as Bitcoin. The US Dollar is not growing nearly as fast as Bitcoin. That in itself should prove its worth as a storage (and even an enhancement) of value. Means of exchange is a little trickier. People can now send Bitcoin to each other. The means of exchange will become more defined as businesses accept Bitcoin as payments. They have incentive to do so as it will be cheaper to process these transactions. Both sides will benefit. Lastly, there is unit of account. Bitcoin struggles in this area currently. If a friend sends you $10 through Venmo, Cashapp, or Zelle, you know what that $10 means. It means about 5 cups of coffee, 2 and a half Big Macs, or 10 things from the dollar store. If someone sends you .0001999 Bitcoin, you don’t really know what goods or services you can purchase for that until you calculate what it is in US Dollars (or your native currency). With Venezuela now using Bitcoin amid hyperinflation in their country and NFL player Russell Okung getting half his paycheck in Bitcoin, this topic of discussion is not going away. In fact, it will become a hotter debate as Bitcoin has become more mainstream in 2020. Maybe it is just a growth investment, but Bitcoin sure is looking more and more like money everyday.
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