Ethereum: Does the bitcoin design make bitcoins suitable as a medium of exchange, a store of value, or both?
Bitcoin’s duality: is it suitable as a means of exchange or value shop?
In recent years, the debate that surrounds Bitcoin is suitable both as a means of exchange and in a value shop has intensified. While many people see Bitcoin as a new revolutionary currency form that can replace traditional Fiat currencies, others argue that its limited use cases make it unsuitable for these roles. In this article, we will examine the tests on both sides of the debate.
average exchange: Bitcoin satisfies the criteria?
The main function of any means of exchange is to facilitate transactions between the parties. This means that Bitcoin must be able to transfer the value efficiently and safely from one person to another. While the decentralized nature of Bitcoin and the peer-to-peer architecture make it an interesting option for individuals, its current limitations in this sense have led many to wonder if they meet the necessary criteria.
One of the main challenges with the use of Bitcoin as a means of exchange are the processing times of relatively slow transactions compared to traditional payment systems such as paypal or credit cards networks. According to Coindesk data, the average transaction time on the Bitcoin network was about 10-15 seconds in July 2022. This is significantly slower than the average transaction time for other digital currencies, such as Visa or Mastercard.
In addition, the complexity and volatility of Blockchain Bitcoin have raised concerns about its suitability as a means of exchange. The decentralized nature of the blockchain can make it difficult to trust the integrity of the transactions, in particular when it comes to elements of high value or a large number of transactions. In addition, the lack of a central authority that regulates the network led to problems of scalability and safety.
Value shop: can bitcoin be a reliable value of value?
The main function of a value shop is to maintain its purchasing power over time. This means that Bitcoin must not only be able to transfer the value efficiently, but also maintain its value without significant prices of prices. While Bitcoin’s long -term potential as an investment has been propagated by some, others have raised concerns about his lack of stability and volatility.
One of the main challenges with the use of Bitcoin as a value shop is its relatively high volatility in recent years. The price of Bitcoin has oscillated significantly in the last ten years, with many investors who have undergone substantial losses or earnings during this period. According to Coindesk data, the total market capitalization of Bitcoin has ranged between $ 1 million and $ 10 billion in the last 12 months.
In addition, the lack of a physical goods that supports Bitcoin, such as gold or silver, means that its value is largely based on demand and offer in global financial markets. This led some to wonder if Bitcoin can really be considered a reliable value of value.
The middle ground: can bitcoin satisfy both roles?
While it is clear that Bitcoin deals with significant challenges both as a means of exchange and in a value shop, there are topics to make for its potential in both roles. One possibility is that Bitcoin can become more widely accepted as a form of payment, in particular among companies and governments.
For example, many countries have already implemented or planned to implement the use of digital currencies, such as Chinese yuan or Indian rupes. This suggests that there may be value in having a digital currency as Bitcoin capable of facilitating transactions through borders.
In addition, some supporters argue that blockchain technology behind Bitcoin is suitable for other forms of storage and validation, such as intelligent contracts or decentralized applications (APPS).