What Is the Issue with Bitcoin (Cryptocurrency)?
Bitcoin has resurfaced in the news. Any bitcoin supporters argue that the cryptocurrency’s price is going up because it is threatening gold’s status as the only supra-currency, the commodity to hold while fiat currencies are debased. Is bitcoin a one-of-a-kind emerging store of value that combines some of the advantages of both technology and gold? Bitcoin Supreme is one of the best recommended trading application, use this application and start trading.
Bitcoin Is Not Money
Despite common opinion, cryptocurrencies like bitcoin are not technically nor legitimately money. Bitcoin is used to price and settle a small range of products and services (or other cryptocurrencies). As a form of currency and a means of payment, Bitcoin also isn’t universally accepted. Before being sure, a slew of blockchain payment apps has sprung up in recent times to entice users to use them. Aside from a few underworld deals, none of them would have made it through the planet’s everyday transactions and transfers. Importantly, cryptos are priced in US dollars (or other fiat currencies). As a result, they’re no different than any other item priced in USD on the other side of a transaction. A country’s laws must give a method of payment official monetary unit status in order to be considered a currency. This legal tender status enables consumers to pay their duties by transferring the others to shareholders in a lawful manner.
According to a recent study, 80 percent of the world’s central banks are prohibited from issuing digital currency under current laws, or their regulatory structures are vague. Even then, in 2020, China enacted legislation enabling its central bank could release a digital currency, resulting in the development of the world’s first formal digital currency, its Virtual Currencies Electronic Payment System (DCEP). Through its digital nature, DCEP is not a cryptocurrency throughout the traditional sense. Legal tender status is normally assigned to payment forms that are simple to pass and use by the general public. Bitcoin or bitcoins must be included in digital technology, including laptops, smartphones, social networks, and communication. Because of this, it is unlikely that cryptocurrencies will ever become money. It’s similar to Mark Cuban’s case regarding bitcoin as a medium of exchange.
Bitcoin Is A Medium for Investors
Bitcoin advocates contend that it is a tradable currency. Granted, some support, including such commodities, have no yield, but they have been traded even though they are useful (for production or consumption). Cryptocurrencies have neither a source of income nor a practical application. The idea that cryptocurrency has a market value and may be traded means that speculation is their most powerful ‘raison d’être.’ As a result, crypto values fluctuate violently and at random.
Bitcoin Is Not Indeed A Store of Value
Something must be liquid, widely recognized, and have a constant value to function as a store of value. Bitcoin and other cryptocurrencies do not share any of these features. Because of the presence of “whale wallets,” Bitcoin exchange suffers from illiquidity and manipulation (wallets keeping disproportionately vast amounts of bitcoins). The top 100 wallets are projected to hold 13% of the overall bitcoin supply in late 2020, with the names of most of the shareholders unknown. Consequently, it will just take a few whale deposits to exploit the bitcoin market and trigger crazy price fluctuations. Bitcoin and cryptocurrencies are unsuitable as a store of wealth due to their extreme market instability.
Fixed Supply Is A Concern, Not Certainly A Benefit
Contrary to popular belief, the options of bitcoins and other cryptos are not a benefit and do not protect value; it is, in fact, a major obstacle to their acceptance as money. As of today, there are 18.6 million bitcoins in circulation. The final bitcoin will also be mined in 2040. Any cryptocurrency has a limited supply, and the rate at which it can be expanded is unpredictable and uncontrollable. Since the static ‘money supply’ will rob central banks of the right to execute countercyclical strategy, cryptocurrencies are unsuitable as legal tender.
Crypto proponents, on the other side, have gained from general skepticism and mistrust of fiat money as a consequence of post-Global Financial Crisis (GFC) monetization. They’ve cleverly twisted this supply dilemma into a justification for cryptocurrency as a defense against doomsday scenarios. This, in my view, is false.
