Is bitcoin money?
"Michael Saylor just bought another 2.1 billion dollars of bitcoin last week"
If bitcoin is money, why do we keep talking about it in dollar (or Euro, or Pound, or Ruble) terms?
Well, it is because bitcoin is not money… yet. Or is it? And it is so valuable, that no one is spending it right now?
Bitcoin really is an enigma.
What is money?
Well money is divisible, recognizable,…
That really doesn't say what money is. All that list is, is an academic way to say how good a thing is at being money.
What money is, is whatever is accepted by other people as a form of payment.
Stamps in a prison, big bottles of Tide in the projects, flakes of gold in Zimbabwe… And right now, The US dollar in most of the world.
However, there is one thing that makes bitcoin a money that is not being used right now, Gresham's Law. Gresham's Law says, "bad money drives out good". And the reason no one is really spending bitcoin is because you spend the bad money first.
Fiat currency is going down, so, anyone with a choice will spend the fiat first. On top of that, few recognize bitcoin, and all recognize dollars.
Will bitcoin become money?
My answer is, not really.
One of the big things that a money needs is that everyone has at least some of it, and that that money is being spent, moved around.
With only 21 million bitcoin, that is only 0.03 bitcoin per person. However, that Saylor person almost owns/controls 1 million of them. And ETFs own a lot. So, that is getting closer to 0.01 bitcoin, and then if we subtract Satoshi's cache…
By the time people wake up to crypto being money, they will have missed out on owning in bitcoin. So, bitcoin cannot really become money.
However, what it has become, what it is now, and looks like it will be in the future, is bitcoin is the worlds best financial asset. The store of value to beat all other stores of value.
Bitcoin as the new "gold" standard?
This is a hard concept to ponder, because we really do not know what a gold standard is like.
We also do not know what a bitcoin standard would actually mean.
We could set up an atomicDEX that actually keeps an up to the second equivalence of cryptos vs bitcoin.
OR, we could come to several defined trading values. Like, 5 LTC = 1 BTC.
OR, it just works out, that over time, trading values just go to a number that barely moves.
In the gold standard, there was a defined value of dollar, being $20 per ounce of gold. And, that got broken because too many dollars were printed, so it went to $33, however, we still never knew if there was enough gold in the vaults.
With bitcoin, we may actually know the amount of trading bitcoin, and the amount of trading other cryptos. And so, from that point of view, we may no exactly how much bitcoin is being held on reserve. We have never had that. An auditable backing to our currency.
It will be interesting to watch what happens. There will be a group that wants to force it, and another that wants to let things happen naturally, if they do happen at all. And there will be a group that wants to manipulate this for their own benefit.
One could say that is already happening in the ETFs, however, instead of the ETFs doing the manipulation, bitcoin is going to rekt the ETFs.
I do not feel that bitcoin is going to become money.
What it will become is something we don't have words for.
Maybe the "World Reserve Asset"?
Maybe it won't be bitcoin that is defined, but bitcoin is defined in goods/commodities. Such as, 1 roll of good quality toilet paper = 1 satoshi. That becomes the defined price. It may not start out this way, but over time, it just works out this way.
(and that roll of good quality toilet paper stops being sold in stores, but bought online, paid in crypto and sent straight to the home/community. These things become far more doable when crypto is the means of payment. Almost no delay, and provable payment received, that is already computer readable.)
I wish it was now. I would love to set up an online store that takes crypto, but we can barely do that here on HIVE, which has the HBD already set up.
The rest of the world seems poised to start dipping their toes into crypto. While we here have seemingly been waiting decades, decades i tell you! for crypto adoption.
Bitcoin is going to be a big component of what we will call "money" in the future, but i really feel that we do not have a name for what bitcoin will become.
Things are going to be very interesting.