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Friday, August 11, 2017

Liquidity and Stability - Bitcoin as Currency and Asset

Liquidity and Stability - Bitcoin as Currency and Asset

Bitcoin’s ever-volatile prices have reignited the debate about its usefulness as a currency. Most Bitcoin enthusiasts tend to think of Bitcoin in currency terms, calling it “cryptocurrency,” or “digital currency.” Concern over Bitcoin’s usefulness as a currency has led to conflicts over the very nature of Bitcoin.

In some ways, Bitcoin suits the definition of currency quite adequately. It allows for the creation of secure and transparent transactions, therefore proving adept at transmitting value. Yet, as most enterprise-level financiers have pointed out, the volatility of Bitcoin greatly decreases its usefulness as a currency.

Further, currencies must be liquid, and current regulatory and technical barriers to entry, along with thinly traded markets, make Bitcoin much less liquid than fiat currencies.

Others argue that Bitcoin is an asset, like real estate, gold or other stores of value. This argument centers around the nature of Bitcoin as a commodity that can be purchased and stored with safety and confidence. Gold, for example, can be purchased and stored, and while the price of gold may fluctuate, gold has intrinsic value because of what it is - an asset.

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Source: CoinTelegraph

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