WIN 500 SP - DISCUSSION: "Should Bitcoin Just Be a Currency or Store of Value?"
Should Bitcoin Just Be a Currency or Store of Value?
Introduction
It's been about a year since I joined Steemit and I thought it would be useful to have a little competition to celebrate.
I've noticed some of the discussion and engagement has gone down so to get people active again I thought it would be nice to have a debate and put it together with a competition to make it fun.
Therefore I will power up the account of my favourite comment from this post with 500 SP.
(NB the SP will be in your account NOT DELEGATED.)
The question to discuss is -
"Should Bitcoin Just Be a Currency or Store of Value?"
-If so give your reasons why, if not do the same.
People who upvote their own comment will get automatically excluded. I reserve the right to change the rules should I find anyone trying to game this in any way and the final decision will be mine on or after 3pm GMT on Saturday 8th July 2017.
Please also share this on Twitter and other social media as it might help to bring in new users.
(N.B. - I shall be travelling to Manchester today so depending on that I won't be able to respond to comments right away. Please hang on and I will get back to you later.)
My Thoughts on This Question - Keep it Simple
Basically the primary thrust of my argument on this comes from the fact that as the first successful implementation of blockchain Bitcoin is a special case:
It acts as a gateway to all other cryptocurrencies so their success and failure is somewhat tied to bitcoin itself.
This is even more so because bitcoin is the only cryptocurrency (at present) that exists in the general public consciousness.
Any kind of failure or perceived failure in bitcoin has a massive effect on the perception and progress of cryptocurrencies in general.
The more attempts people make to add extra features onto the bitcoin blockchain, the more complexity that gets added to it and to be honest it doesn't even work very well.
Just look at how people have abandoned projects like Counterparty - for solutions which offer them more flexibility.
By keeping Bitcoin primarily as a store of value and/or a currency we keep it simple and in theory at least reduce the bloat on the primary blockchain.
It may also help to reduce future arguments and schisms over protocol changes, as there will be less impetus to add new features to try to compete with newer projects.
So in summary, I believe keeping Bitcoin focussed and working optimally as a form of currency is hard enough and so should be the only focus. In some cases simplicity is best.
What do you think?
Thank you for reading
@thecryptofiend: I will submit my answer for your question according to my point of view.
"Should Bitcoin Just Be a Currency or Store of Value?"
In order for Bitcoin to be a currency, there need to be some changes especially when one considers the what is required from a currency. Firstly the transaction time for Bitcoins take to long and it is far too volatile. If it is compared to other currencies such as the US$ and the Euro a person will notice that fluctuations are very small and on a daily basis probably less than 1%.
Therefore you need to consider the implications of when a person borrows money to buy a house or car. If Bitcoin is used at the current volatility and can change as much as 40% in one month one will never be sure what needs to be paid back. In order for Bitcoin to be secure, the mining system is used and this makes the transaction time very slow compared to other major currencies.
Taking the two limitations into consideration it will be difficult to envisage Bitcoin being used as a currency until it is stable and the transactions are almost instantaneous. Therefore as it stands now it could safely be used for speculating purposes and as a commodity asset such as gold or silver.
Can it Survive solely as a store value?
The answer, in short, it probably cannot. The reason is that as things stand today there are very few people that are using it at as a currency. The reason that the value of Bitcoin is driven up is that the speculators are believing that somewhere in the future there will be more people using at as a currency and other related applications. But if that does not materialize then the value will slowly collapse as the demand drops.
Bitcoin, unlike money, is set at a fixed amount that will ever be mined. This will create a problem when at some time in the future the economies will still be growing which could create a deflation situation. The basic principle of money is that the money supply should keep up with the economic growth. That will not be possible with Bitcoin after it has reached a number of Bitcoins that can be mined.
Future of Bitcoin
At the moment it is probably too early to establish whether Bitcoin should be used as a stored value or as a currency. Due to the volatility of the currency, it would be difficult to use it as a currency but at the moment it is performing well as stored value.
Without it being used as a currency the stored value could eventually collapse therefore it requires both. For it to succeed as a currency for years to come and as stored value, it will need more recognition as many countries have already banned the use of Bitcoin and some developing countries do not have the infrastructure to trade in Bitcoin. Unlike gold which is accepted by virtually every country and is classed as one of the best ways to invest.
Thank you so much for reading, have a good day!
Hi - you didn't win the 500SP - there was one answer I liked slightly more but I think it was so close that I still wanted to award you something for your great answer. I am going to power up your account with 100SP - not a lot but I hope it helps:
@thecryptofiend: Thank you so much, i really appreciate your generosity and thoughtfulness.
@gwiss: Congratulations mate!
You're welcome. Thanks for such a great response:)
Excellent answer!
Thank you so much for reading, really appreciate that. I know it was bit long sorry about that but hopefully i clear my points well. REGARDS!
3 functions of money:
Store of value. This is where money gets its start -- it's held for value before it becomes money, and because everyone holds it, its reputation as a store of value becomes universal.
Medium of exchange. Everyone knows it is valuable, so people will accept it as a placeholder for barter, which mitigates the "coincidence of wants" barter problem -- medium of exchange is the second stage for money acceptance.
Unit of account. Once everyone uses it and the market tells us what everyone thinks it is worth, then we start to think of the prices of everything in reference to that money --how much gold something costs rather than how much gold you have. At this stage money shifts from numerator to denominator.
There are many other qualities of money (portability, divisibility, etc) but these are only things that separate good money from bad.
Now to some extent, these three functions of money are like 3 legs of a stool -- until that stool has 3 legs, no one wants to sit on it, and therefore it's difficult to gain universal acceptance. Without store of value no one wants to hold it, without medium of exchange it is unlikely to be accepted, and without unit of account no one knows what it is worth.
So getting these 3 going is like breaking into a ring -- where does the whole thing start? Cryptocurrency is a new beast -- it will never be held because it is valuable intrinsically -- what really is the point of holding proof of a computation that no one needs or asked for, after all. The only reason to hold it is that other people also think it is valuable. Thus establishing that value link to the real, physical world is the primary limitation for cryptocurrency in general.
Fortunately, cryptocurrencies have already fulfilled the first function of money in people's minds. Bitcoin has created enough visibility that people now are willing to accept that it is worth something (thrashing out exactly how much is where the volatility comes from right now.) This is the most difficult hurdle to cross, yet here we are, only 8 years later and there is already money pouring into it because everyone has already accepted that it is worth something.
We are currently fighting our way through the second function of money, but as more governments bend to the inevitable like Australia and accept it as currency, this will slowly get ironed out. And then, eventually, we will all start to think of the physical world in units of cryptocurrency as it shifts from the numerator to the denominator of our world view.
The explosion of competing cryptocurrencies are the flip side to their detachment from the real, physical world. Being unlinked from the real world is why they are so useful, after all -- you can't verify that gold is gold through the internet due to the physics limitations on matter, but you can verify that crypto is crypto. But being unlinked from the physical limitations of matter also means that there is no barrier to entry. The deluge of new cryptocurrencies will not stop any more than new cars, computers, or phones will stop being developed and launched into society.
The next stage for crypto, while it continues to gain larger acceptance, is for the market to start sorting out all of the qualities of good crypto money. For physical money, these are things like portability and divisibility and fungibility. For crypto, there will be a whole new list of qualities in addition to the traditional money qualities that must be met in order to qualify as a "good" cryptocurrency -- speed of transactions, cost of transactions, security, etc. And the market has and will continue to produce many varieties with different qualities that the market will try out and judge.
Which finally brings me to the point (I know, not a minute too soon...) -- bitcoin was a prototype. As a prototype, it was designed just for transactions. There is a whole lot more that the blockchain concept can handle, but bitcoin wasn't designed for that. Trying to add on more and more functions is like bolting on parts to a model T or continuing to upgrade an apple IIe. I don't mean any offense to bitcoin here, but there is only so much that the architecture can handle. How well blockchain handles additional tasks depends on how it is designed. They are not all the same, which is why there are so many varieties currently.
Bitcoin changed the world. But trying to make bitcoin be everything runs the risk of it doing everything poorly, and that would be a big step backwards for cryptocurrency. Let Bitcoin do what it was originally designed to do so that it can continue to do that well.
Brilliantly put.
Well done! You won the prize I will power up your account now.
I think that bitcoin cannot be a currency for now because of following reasons-
Unstable
Transaction time
As a trader's view I don't want crypto-currency to become stable but if it's to be used as a currency. Then I prefer it to be stable, I think it can be stored as a store of value for technical people., who can quickly manage the situation that even if it crashes.
So these are my views
And I want to thank you for the contest I was feeling the same so I started a contest by my own to encourage new people.
Wait -- native currency -- the USD? The fiat that is based on debt? Falling since 1913? That stable?
I am being a little facetious here - because all Central Bank Fiat as all but stable. It's a subject for another time though.
I do agree that it's falling but the change is not so much in short interval of time . What I am trying to say is that Bitcoin can pretty damn high or low within 1 day if I want to buy a car with Bitcoin that that I purchased yesterday . And Bitcoin crashes today.Damn I am bound I will have to buy a wolkswagen instead of lambo
True - it is still volatile. I think it will level out to a more stable asset/currency once the mining has been completed.
BTW, VW is good German engineering. And lots more fuel efficient. 🚗
Lol the VW won't catch fire when you are driving it!
There is that 🔥
WV is a good company but it 's cars don't have potential to steal someone's chick. Lambo's do have
LOL just kidding
Roar's V12 and steals @globocop 's chick
WHICH ONE 👧
@varunsangwan?
One who is sitting along me in lambo
asks name
she- denies to answer
Great answer mate. Short, clear and to the point!
correction 'to the point' instead of 'too the point'. ; )
Lol thanks!
HAHA Thank you man. Glad you liked that. Always feel good when I see your posts, you present something surprising every time
I am telling you that bitcoin is both a commodity and a currency. It is a commodity since it is a property that you can purchase using dollars or fiat currency. But it is also a form of currency since you can use it to purchase things online and is also given as a form of salary in online jobs. Bitcoin becomes a commodity even it is a currency because it is not independent in itself it is backed up by dollars to have a value.
And for the Store of value, In my opinion that bitcoin is an awful currency, and one of the reasons for that is the volatility we're seeing. Can't have money fluctuate like that and still retain the drive to spend it. I guess that argument might also go against it being a good store of value, but I think it's more that than a currency.
Yes the volatility is a big problem.
Thanks for the awesome opportunity here @thecryptofiend
My entry is the video above, basically I'm on the side of Bitcoin should be moreso an asset (storage of value) rather than a cryptocurrency. In a perfect world it would be both, but unfortunately we don't live in such a fantasy.
Bitcoin's main problems are with the public perception of things. It's unstable and highly volatile, it's slow and has high fees, and as it begins to go a little more mainstream it's reputation will be better however some will always still associate it with scams, thieves, the dark net, drugs, ponzis, etc.
In order for Bitcoin to truly succeed as a cryptocurrency that is accepted worldwide and would have a chance to replace or at least be amongst the regular FIAT currencies, it would need to be welcomed by the masses. The average person is still confused by it and extremely skeptical. Don't get me wrong, I'm a BIG fan and advocate for BTC and similar, however it has a very lengthy journey up ahead of itself. It's got more use as an asset currently and to be treated like gold by the large investors. Maybe if there were drastic changes done to it, maybe it'd have a chance at being an "actual" currency but in its current state.. not so much. And IF there were such changes made, how would that have an effect on Bitcoin and the cryptocurrencies themselves?
Very interesting time we're living in, and I'm both nervous and excited to see what will happen over the next few years. Will our kids grow up using BTC? How many countries/governments/banks will recognize and accept it? Is it just a commodity for a select few who distrust the current system? So many questions, and only time will let us truly find out.
May the best selection win the 500 SP. I encourage many of you viewers to enter. Cheers :)
Store of value is a spook. Value is a spook. Currency is a spook.
Not sure what you mean by spook - you mean like a ghost?
A ghost of the mind. It looks like you haven't read up on max stirner. A spook is something that doesn't objectively exist but you still let control you. Morals, property rights, and currency are some examples.
This comment has received a 2.95 % upvote from @booster thanks to: @anarchyhasnogods.
Interesting.
This comment has received a 1.48 % upvote from @booster thanks to: @anarchyhasnogods.
I am a huge proponent of the KISS Principle (or Occam's Razor if you want to go erudite). Keep it simple... One reason is that not everyone that comes into the crypto market has the same experience as perhaps someone like you. In other words, they don't understand what's going on and have to have some concrete point of reference... currently, that seems to be Bitcoin. It's the bell-weather by which all other cryptos are judged and people need to be able to understand it.
I know nothing about cryptos... other than Bitcoin and Steem. Etherium, I've heard of but beyond saying it's a cryptocurrency- I can tell you nothing. Now multiply that by 50 or 100, or how ever many other cryptos there are... imagine the confusion for someone just entering the market- which way to turn? What is this worth? What is that worth? What can I compare it to? Ah, Bitcoin!
There are a number of other reasons I can think of, but I'm not writing War & Peace. Just for the simple reason of making the market understandable for a new and uninitiated, for the most part, clientele is reason enough. Thanks for hearing me out.
Sometimes keeping it simple is very important. That applies not just to Bitcoin but to your response too - I think you know more than your humble words would imply! Thanks for taking the time to respond mate:)
Thanks for taking the time to read.
I think it should be used more throughout our daily lives to make transactions to buy a product. I think this will drastically increase the volume of trade of BTC making the currency less volatile as well as it would help it be recognised by a wider audience leading to further growth as well as more investment into the currency. However, I don't think it will be used by anyone. I think most people will grasp tightly to their Dollars, Pounds or Euros but this will mostly benefit BTC enthusiasts.
Also, if it is available across the world to use in consumer stores think of all the time you will save as well as money as you no longer will have to convert your national fiat currency to another and pay extraordinarily high conversion fees.
However on the other hand bringing all this new attention and volume of trade will lead to the already excessively long transaction time to increase and people may start turning towards other altcoins such as Ethereum or Litecoin and I don't think it is great to have different organisations accepting different coins; it just adds more hassle as well as the loss of some money due to coin conversion fees. However, it could lead to currencies like Steem, Ethereum and other coins to be able to stand for themselves and not be drastically affected by BTC.
Moreover, it will take away from what everyone loves about BTC; it is anonymous. I can see in the future with many people using BTC on places like Amazon it would take away from the anonymity as someone's Bitcoin Wallet Address may have to be linked to their Amazon account which will contain one's name, address and other details.
In the end, I think it is better for it to be of Gold and Silver. Something to speculate over but it is not a great storage of money as the volatility does not ensure it.
This is the most I've ever typed regarding cryptocurrency haha.
Well, I hope you have a great trip to Manchester @thecryptofiend
Great answer. I think it is pseudo-anonymous rather than truly anonymous as various people have been able to demonstrate the ability to trace some transactions. As for the volatility I think it is part of the market and hence volumes involved still being small compared to other markets.
Manchester trip turned into a nightmare on the way back sadly due to roadwords and one of the main roads being close. Was dawn before I returned!
That sounds terrible.
The scorching heat in the UK probably didn't help much as well.
Hope all is well now.
Thankfully it was quite cool yesterday - in fact the rain was more of a problem.
Bitcoin shall be a store of value primarily.
It is not suited as a payment currency, it is far to slow for that. So use it for what it is good for, value store and 'save haven' for anybody who have money in crypto.
Bitcoin network is slow
That is not an issue for value storage.
Bitcoin has by far the largest market cap and is most stable crypto in the market
Therefore a good store of value.
Mass public
They indeed know only of Bitcoin and this will be like that for the foreseeable future, again THEY reason why Bitcoin will be the perfect store of value.
So many other coins have better implementation for speed and flexibility: let them provide the things required for the market segments they build their blockchains for.
De-centralised
Maybe Bitcoin is also the most de-centralised crypto in the market. That is a huge +!
Short and to the point. Beautifully presented too. I think this is one of the best summaries of the main points I have seen. I would also add that it is in theory at least also the most secure.
Thanks man! Although I can write long stories, I think the shorter versions are better :) Good question you asked, and great you're running this challenge to get interaction going. Appreciate your efforts really much.