With the recent adoption of bitcoin as a legal tender in El Salvador, there talks about bitcoin about how successful it become, will other countries follow El Salvador’s lead, will it be the future of money and the world economy? Is bitcoin really money? bitcoin is only virtual, how come it has so much value? However, we can not ascertain the success of bitcoin because of it’s adoption by El Salvador or due to the recent bull experienced by the world’s most popular cryptocurrency, after all it has witnessed some fluctuation in price which saw investors loss money.
Is bitcoin the future of money and global economy?
The likely future of bitcoin has long been debated, and it is uncertain if bitcoin is the future of money but many believe that bitcoin is here to stay. Will it replace the traditional mode of transacting or will it at some point become just another financial product to exist along side the already existing mode of transactions, well that is left for time to tell. However, bitcoin is good for the economy because it supports financial transactions just as much as traditional currencies and if it could overcome the lack of social trust bitcoin can even provide more significant benefits by generating more opportunities for economic development.
Is bitcoin really money?
Firstly let’s take a look at the definition of money, “as anything that has a fixed and
unvarying price in terms of the unit of account” and “is accepted within a given
society as payment for goods and services rendered”. Putting this definition of
money into consideration one could have a varying opinion of bitcoin as money,
though bitcoin has gained wide acceptance and serves as a means of exchange for
goods and service rendered but still do not meet all criteria in this context as bitcoin
do not have a fixed price in terms of the unit of account due to it’s limited supply and volatility.
Bitcoin virtual existence, why does bitcoin have Value?
From the price history of bitcoin it wasn’t this valuable after it’s advent in 2009.
Bitcoin gradually but constantly appreciated in value over the years. Today bitcoin
has become very much popular and with this popularity it’s value has soared high to
the amazement of financial experts because bitcoin only exists virtually.
However, things are as valuable as the worth we attach to them and bitcoins are
considered valuable because they are useful as a medium of exchange eliminating
the barriers of inter border transfers. For instance early money standards in Nigeria
were based on the cowries and they served as a medium of exchange due to the
value attached to them. In essence whatever standard is being used as money has
a value attached to it because money has no practical application but to fulfilling the
role of money as a result of the value attached to it.