I've wrote an article in 2014 to answer some of your questions[1]. More specifically, on the value of bitcoin as a currency and where the value comes from: ---

I've wrote an article in 2014 to answer some of your questions[1]. More specifically, on the value of bitcoin as a currency and where the value comes from: --- 3.2 the currency Bitcoin was introduced to the general public as a cryptocurrency in 2009. Apparently bitcoin was introduced as an alternative to FIAT currency for online payments. But there is a fundamental design decision that makes, bitcoin as a currency, contradictory: bitcoin is deflationary by design. There can only be produced 21 million bitcoins. Initially I thought that Satoshi5 made a mistake. But given the genius that takes to create the state-of-art cryptographic protocol that bitcoin is, a mistake from Satoshi was hard to digest. So my bet is that Satoshi had a deep understanding of macro-economics and consumer’s psyche. He knew that mainstream consumers wouldn’t have any incentive to own a currency that is inflationary with no inherent value, backed up by no one. Since there was no other to way to force someone to own bitcoins - Satoshi was not in a position to force the proliferation of bitcoin - the only way turn bitcoin mainstream was to make it deflationary, to give bitcoin users something to aspire on, a good return on investment. Hence I believe that this was a kind of forced decision, to make bitcoin acceptable by the masses and it was a successful decision in my opinion, otherwise bitcoin might had never took off. I can’t tell if my theory is correct of course. But if it is correct, it paid off. 3.3 no currencies, only assets Bitcoin, in my view, was never meant to be a currency. It was never meant to be used at least directly, for online micro-payments, as the original paper states. If an average consumer has reason to believe that bitcoin will raise it’s value, the consumer will probably choose to hoard and not spend bitcoins when he can spend USD which is an inflationary currency. And there is a very good reason to believe that bitcoin will continue to go up in the long run. The reason is bitcoin’s scarcity. Of course prices don’t go up for ever, but no one can tell for sure when prices will go down. So even when in doubt, most consumers will choose to spend an inflationary currency. So in my opinion, bitcoin is a failed currency. It was meant to fail. It was meant to be used primarily as value storage medium and only in lack of other options as an exchange medium. Of course for bitcoin to be considered an option for medium to big investors, the price needs to stop fluctuating so much. It is a common pattern for new currencies to fluctuate, but since bitcoin’s characteristics are way more similar to gold than FIAT currency, I think that it’s clear by now that bitcoin should be considered an asset (investment) and not a currency. We will see in a couple of years how this will play out, but I don’t think this will change. --- [1]: https://www.convalesco.org/essays/2014/02/11/on-the-matter-of-bitcoin.html https://www.convalesco.org/essays/2014/02/11/on-the-matter-o...