Another All-Time-High: Is Bitcoin a Currency?
Ever wondered whether or not bitcoin can be classified as a currency? Come take a look at our blog to see if it is simply used for financial speculation or can be considered as "digital gold."
Bitcoin has reached a new all-time high at roughly $69,000. It’s come a long way, considering it was just worth a few cents ten years ago. Those who have invested at an early stage have made a fortune; in fact, some have even become billionaires.
The cryptocurrency was founded after the financial crisis in 2008 by an unknown individual or a group of people under the name “Satoshi Nakamoto.” The idea was to create a new way of transferring money using blockchain technology. It aimed to create a global transaction market that doesn’t rely on banks and thus makes transactions cheaper and available to anyone with a wallet and an internet connection.
Now, about 12 years later, Bitcoin has developed its own value proposition. But is it still a currency?
Bitcoin Is a Speculative Asset
Bitcoin can be a currency, but it is rarely used as such. Most people who buy Bitcoin don’t use it to pay for goods and services. Instead, they mostly use it for financial speculation, meaning they hope the price goes up so that they can sell it and reap a financial gain.
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Some Say Bitcoin Is Digital Gold
A second narrative is that Bitcoin could be the digital equivalent to gold. Like gold, it is scarce, highly secure, and valuable to those people who believe it is valuable. Thus, Bitcoin proponents say digital gold could, similar to physical gold, be used as a diversification tool in investment portfolios or to protect investors against inflation.
It Could Become a Currency in the Future
So if it is a speculative asset or a gold-like store of value, does that mean it is not a currency? Not quite; it still can be a currency, just like gold can be a currency. But it is not used as such, neither gold nor Bitcoin. That, however, doesn’t mean it won’t be used as a currency in the future.
However, for that to become even remotely realistic, Bitcoin developers will have to find ways to increase the network’s transaction speed and to make it more eco-friendly. Bitcoin will almost certainly never be used as money unless that happens.
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