Opinion: Bitcoin is not a currency but a raw material

Bitcoins are probably the best-known cryptocurrency and are still in the spotlight, as their value continues to grow. They have recently surpassed the USD 5,000 mark and briefly exceeded the USD 7,000 mark. But are they really suitable for placement?

Bitcoin is probably the best-known example of all fast-growing crypto-currencies. These are digital currencies, which are “exploited” (by analogy with the extraction of gold) and kept electronically. Their main characteristic, however, is their decentralized nature: they are neither issued nor controlled by a central bank. On the contrary: they rely on an autonomous network: although the transactions are publicly diffused, the crypto-currencies are (still) completely anonymous. Another advantage is that transaction fees are almost non-existent. The underlying technology of cryptocurrencies is known as “blockchain” and is currently attracting a lot of interest.

Crypto-currencies have seen their reputation suffer since their launch. On the one hand, the list of bitcoin scandals is growing eight years later, on the other hand, they reveal a number of still unresolved challenges, including, for example, regulation (legality, taxation, etc.), still in its wake. debut. Finally, because of their anonymous nature, they are often used to finance illegal activities. Crypto-currencies, in general, and bitcoin, in particular, can already be used as means of payment in certain places. But is it really a currency strictly speaking?

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 US Commodity Futures Trading Commissions decided, as early as 2015, to classify cryptocurrencies as “commodities”.

The buzz around crypto-currencies, in general, and bitcoin, in particular, in the second half of 2017, should not, however, induce investors into the mistake that they will one day replace us currencies.

Let’s summarize from the point of view of the investor: Bitcoin is by no means an investment – cryptocurrency is a purely speculative instrument (with the risk of total loss), and should be treated as such in the context of ‘a wallet.

Crypto-currencies may well remain a topic of discussion in the future, as blockchain technology, which underlies cryptocurrencies, is still in its infancy and may well upset the creative chain. value of all economic sectors over the next decades. The technology is therefore comparable to the beginnings of the Internet in the 1990s – just think of the omnipresence of Google and Amazon today. The future will tell us if legal and / or regulated crypto-currencies will emerge and possibly succeed.

You May Also Like

mm

About the Author: Ron Evans

Ron is the lead editor for BitCoinPlussNews. He is also a nationally syndicated newspaper columnist and a bestselling author. He lives in Los Vegas and covers the intersection of money, politics and finance. He appears periodically on national television shows and has been published in (among others) The National Post, Politico, The Atlantic, Harper’s, Wired.com, Vice and Salon.com. He also has served as a journalist and consultant on documentaries for NPR and ShowTime. In 2014, he was the winner of the Society of American Business Editors and Writers' investigative journalism award, and the winner of the Izzy Award for Journalism from Ithaca College's Park Center for Independent Media. He was also a finalist for UCLA's Gerald R. Loeb Award and Syracuse University's Mirror Award.

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: