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Money has 3 main uses: a medium of exchange, a unit of account, and a store of value. Bitcoin works reasonably well as a medium of exchange, as long as transac
by kyle-rb 9y ago
Money has 3 main uses: a medium of exchange, a unit of account, and a store of value.
Bitcoin works reasonably well as a medium of exchange, as long as transactions are confirmed relatively quickly.
Bitcoin prices are pretty much always tied to the price in US dollars or some other fiat currency. Online prices can be changed dynamically, so Bitcoin doesn't really need to be its own unit of account.
But it never really works as a store of value, due to its volatility. I have about $20 in Bitcoin today, but I have no idea what that will be worth in a week, so it's risky to keep any large amount of money in Bitcoin. The safest way to buy things in Bitcoin would be to buy it, and then immediately send it to whomever you're buying from.
So I think that Bitcoin will be much more usable when its price stabilizes, and there's much less friction with each purchase.
- kaleidic 9y agoYes - that's right : people mostly shouldn't need to hold such high Bitcoin balances to buy things. What's in the way is the state interfering so you can't change dollars for Bitcoin with your bank and there aren't services that do that which are convenient enough. In time this will change so you can just make Bitcoin payments from your checking account.
- taysic 9y ago"In time this will change so you can just make Bitcoin payments from your checking account." If Bitcoin could displace banks, what incentive do they have to displace themselves?
- MarkMc 9y agoBanks make money by borrowing from one person and lending to another at a higher interest rate. They can do this in Bitcoin just as well as in US dollars.