Hello friend, in today’s article, we see is bitcoin a currency or an investment? and what is the effect on our economy and how we can use it for our best use? so let’s see each and every factor.
is Bitcoin a Currency or an Investment?:-
before the start, let’s understand these terms
Currency means, a medium of exchange,
Investment means, allocating resources for profit.
before considering bitcoin as a currency, understand what is the factor that leads to currency.
A most important requirement of a currency:
Stability is the most important requirement of a currency, so let’s understand, bitcoin is stable or not.
if the currency is not stable, then it’s difficult to exchange.
let’s understand with an example
Suppose you want to take 100 rupees in payment from someone, and you get at the morning. and evening currency prices go down up to 90 rupees, then this type of volatility you don’t like it and this type of currency no one use it.
Is Bitcoin Stable:-
So the answer is, No
Bitcoin is extremely volatile because bitcoin is not a good currency.
Let’s suppose for a minute
is bitcoin a good currency if it becomes stable?
Now, we can use as currency for this question answer is No,
Because of the problem of scalability.
In bitcoin, by increasing trading volume it takes 16 hours to execute the transaction and increases the transaction fee.
If our world’s transaction is on bitcoin, then their trading transaction execution period takes a week to complete and the fee goes to maybe $100.
So no one waited for this time period and no one want to pay that high fee.
Let’s suppose for a minute, the Problem of scalability is solved
is bitcoin a good currency if it becomes scalable?
The answer is, No
Because bitcoin supply is not controlled by central banks or the government ( reserve bank) to run the economic cycle very well.
Money supply may increase or decrease by the reserve bank ( central bank). so bitcoin is not controlled that’s why the answer is no.
If the government increases the money supply more than GDP growth, then inflation increases.
Inflation is good, that’s why the economic engine (cycle) works well.
inflation means your money value decreases in the next year.
Because of inflation, this thing people get helped or motivated to invest their money and spend wisely.
so in bitcoin, the money supply is fixed, so inflation is impossible, but deflation may happen.
Deflation means, your money value increase in the next year, so because of this people don’t spend money or do not invest money in this activity, economic engine stop.
and like in 1929, the Market crash, after this crash, the great depression comes, that type of thing happens if deflation of money increases so recovery takes almost 10 to 20 years in future.
In summary says, If all problems solve with bitcoin without the permission of center and government this bitcoin can’t use as a currency or not work as a currency.
if government interference is required to use bitcoin as a currency, then why government uses bitcoin as a currency, then they can use their own digital cryptocurrency like rupee coin, etc.
so above discussion, we conclude that bitcoin is not a good currency.
so now let’s see whether bitcoin is an investment or not
A most important requirement of an investment?
Is important to become an investment.
has bitcoin shown any growth? the answer is
yes, bitcoin gives, a 1,000,000X return ( you can read the previous article) in 10 years
so this type of growth, not even the stock market gives.
Bitcoin is a very high-risk, very high return investment option.
so this investment is not like Benjamin Graham, Warren Buffett, and Charlie Munger’s definition of investment.
for this speculation option to be precise.
Bitcoin is just like, bonds and stocks, but the only difference is bitcoin’s value comes from intersubject reality
means, people things, ow bitcoin has value is $150,000. so big value becomes that if everyone thinks the value is zero, then their value becomes zero.
anything, cannot be currency and investment both at some time.
Because stability and growth can not exist at the same time.
If stability has then growth can not exist at the same time.
if growth has then stability can not exist at the same time.
so people whatever say, like, bitcoin is currency, they can replace bank, but actually everyone thinks Bitcoin is an investment.
to prove this point,
when the bitcoin price goes stable, by seeing the price of bitcoin, people don’t get happy, they get worried about why people’s bitcoin goes high, and say bitcoin stop going higher.
Because people stop accepting bitcoin so above thought needs profit, not a currency lover.
so the last conclusion is that Bitcoin doesn’t have a currency future but bitcoin can become part of investments like bonds, stock, and cryptocurrencies.
Read More Article
- Bitcoin Story
- Basic of cryptocurrencies
- problem with cryptocurrencies
- bitcoin value
- the psychology of money