Is Bitcoin Money

A rather controversial topic

Let’s talk about one controversial topic today, is Bitcoin Money?

Bitcoin is not as popular as 5 years ago when its price surges, those who somehow has bitcoins in their wallet accidentally changed their entire life, while the bearish never stop claiming bitcoin is the one of the biggest fraud in the human history.

In 2018, there was a course in MIT which is “Bitcoin and Money”, the course was open to public in 2020, the price of Bitcoin started to increasing when the course happens but not as high as now, there were many times professor Gary Gasler and students discuss whether bitcoin has real money in it in the class. even Gary can not predict what bitcoin will go in the next 5 years.

before we enter into the argument, let’s figure out one simple question:

What is Money?

Money has many functions like store of value, unit of account, forget about those obscure nouns, let’s try to understand in simple language, before money was invented, our ancestors trade in the form of barter, it works but not efficient, eg. I got extra rice and needs cloth, you have extra cloth but you’ve got enough rice, in this case I have to find a third person to complete the barter. To fix this, human come up with an idea of finding a medium of exchange, which is widely accepted among most people, in the human’s entire history, more than one object were used as such medium, classic one is Shell, also Salt has been used as a currency in various parts of the world due to its importance in preserving food and enhancing flavor. then people found gold is a perfect element, not only because it’s kinda of shiney but also because of its scarcity and stability. some other elements like iron is so easy to be rusty, and too many in the world, anyway, that’s how we have money in our lives.

You might wonder why we cash in our daily life today rather than stick with gold, while in the old days, people found it’s not convenient at all to carry gold to shopping, as you may know, gold is a heavy element, then a new idea surfaced, people deposit gold to the most trustworthy goldsmith in the town, exchange for a note that has information like the weight of gold from the goldsmith, and most importantly, the goldsmith’s signature, anyone can get back the gold from goldsmith with this note, so human can use such notes as gold for trading in the market, this kind of “note” is the predecessor of today’s cash.

you might have more questions when you reach here, like what if goldsmith secretly make more notes and then spend it, so there will be more notes circulates in the market than the equivelent gold. or what if bad actors fakes goldsmith’s signature and so on, economy is an intriguing topic but not this blogs focus, you can find some books if you wanna know more.

so far we can extract some keyword about money:

• scarcity
• stability
• trust

Is Bitcoin Money?

When we look at the characteristics of money, Bitcoin shares many of the same features as traditional forms of money. the amout of total bitcoin is 21 million which is scarce, as a digital money there is no need to say its stability, bitcoin is also divisible, which means that it can be broken down into smaller units.

However, the main thing here is trust. Bitcoin is not widely accepted as a form of payment. while there are many merchants that accept Bitcoin, it is not yet a universal medium of exchange in the way that traditional forms of money are.

Bitcoin is not issued by a central authority. Instead, it is created through a decentralized network of computers, and its value is determined by market demand and supply. This makes Bitcoin highly volatile and subject to significant price fluctuations, which can make it challenging to use as a stable store of value.

the question of whether or not Bitcoin is money is complex and depends on how we define money and the characteristics of Bitcoin. While Bitcoin shares many of the same features as traditional forms of money, such as being a medium of exchange, store of value, and unit of account, it is not yet widely accepted as a form of payment, and its value is highly volatile.

As this blog is written, Bitcoin is becoming something not really close to money but more like an investment, today even SEC could not define what’s the value of Bitcoin is.