Why is bitcoin not a currency?

We at Bitssa.com are of the view that Bitcoin is not a currency due to the following reasons:

Not Asset-backed: Firstly, Bitcoin is not an asset-backed currency just like any other fiat currency backed by gold or oil such as the USD, GBP, Euro, or INR. However, Bitcoin can be considered to be backed by the trust it has in the market due to the hype created on the internet attributing to its high-security feature. Again this is not a real asset.

Not centralized: Secondly, Bitcoin is not a centralized currency. It has a global presence. Unlike, the fiat currency, the bitcoin is not country specific.

Not regulated: Bitcoins are not regulated by any bank or Central/Federal Government. This is a mandatory feature for granting a currency status to a coin or money-bill.

Not a Legal tender: Bitcoin is not a legal tender bearing the signatures of a Banker or Finance Minister of a country providing it legal sanctity to buy or sell products and services. However, there are exceptional cases where Bitcoin is accepted for payment on certain e-commerce websites.

Highly unstable: Another very important criteria for not granting currency status to Bitcoin is that it is highly unstable and moreover volatile. If seen from the angle of any fiat currency such as dollar or pound, they are highly valued since they are stable and causes the consumer to trust blindly in its value as a currency. Whereas, Bitcoin is not as trustworthy as far as its value is concerned. Its value may appreciate and depreciate by 30-40% in a matter of a few months.

In principle, an accepted currency must fulfill three functions: to be a means of exchange and payment, a unit of calculation and a means of preserving value. According to a comparison between gold, CHF and bitcoin (but also valid for all other cryptocurrencies), there is no economic argument to classify bitcoin as money.

The Bank for International Settlements (BIS) published a report in which the financiers went through hard on cryptocurrencies and explained why bitcoin is technically not yet ready to become a world currency.

In the sections “Cryptocurrencies: what will happen after the HYIP?” And “The illusory promise of decentralized trust”, experts say that even now, when cryptocurrencies are on the waves of world popularity, new digital money simply cannot compete with other financial instruments.

Among the main problems that can be used to implement cryptocurrency, and insecurity, because they are still the subject of manipulation and digital fraud around the world.

In addition, the hackneyed thesis that for the production of Bitcoin a year requires as much electricity as all Switzerland, Ireland, Denmark and other small states consume, the BIS reminded of the complexity of cryptocurrency transfers.alt text

Log in to reply

Enjoyed this post? Consider registering for more interesting content!