Should Bitcoin Just Be a Currency or Store of Value?

In order for Bitcoin to be a currency, there need to be some changes especially when one considers the what is required from a currency. Firstly the transaction time for Bitcoins take to long and it is far too volatile. If it is compared to other currencies such as the US$ and the Euro a person will notice that fluctuations are very small and on a daily basis probably less than 1%.

Therefore you need to consider the implications of when a person borrows money to buy a house or car. If Bitcoin is used at the current volatility and can change as much as 40% in one month one will never be sure what needs to be paid back. In order for Bitcoin to be secure, the mining system is used and this makes the transaction time very slow compared to other major currencies.
Taking the two limitations into consideration it will be difficult to envisage Bitcoin being used as a currency until it is stable and the transactions are almost instantaneous. Therefore as it stands now it could safely be used for speculating purposes and as a commodity asset such as gold or silver.

Can it Survive solely as a store value?

The answer, in short, it probably cannot. The reason is that as things stand today there are very few people that are using it at as a currency. The reason that the value of Bitcoin is driven up is that the speculators are believing that somewhere in the future there will be more people using at as a currency and other related applications. But if that does not materialize then the value will slowly collapse as the demand drops.
Bitcoin, unlike money, is set at a fixed amount that will ever be mined. This will create a problem when at some time in the future the economies will still be growing which could create a deflation situation. The basic principle of money is that the money supply should keep up with the economic growth. That will not be possible with Bitcoin after it has reached a number of Bitcoins that can be mined.

Future of Bitcoin

At the moment it is probably too early to establish whether Bitcoin should be used as a stored value or as a currency. Due to the volatility of the currency, it would be difficult to use it as a currency but at the moment it is performing well as stored value.

Without it being used as a currency the stored value could eventually collapse therefore it requires both. For it to succeed as a currency for years to come and as stored value, it will need more recognition as many countries have already banned the use of Bitcoin and some developing countries do not have the infrastructure to trade in Bitcoin. Unlike gold which is accepted by virtually every country and is classed as one of the best ways to invest.

Thank you so much for reading, have a good day!

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