I hear the following about Bitcoin.
Bitcoin is not money.
Having made a lot of money out of Crypto, I can tell you categorically that it is.
Apparently, money is:
A means of exchange
A store of wealth
A unit of account.
To me it is other things as well, but let us leave it at this because apparently Bitcoin isn’t the above and therefore itis not money. It’s a litany I keep hearing, so its about time someone buried this trope in a small but deep hole where it belongs.
It won’t take long.
Lets start with
Bitcoin is not a (good) means of exchange. (At best its way worse than ‘fiat’ money.)
Reality: Bitcoin is an excellent means of exchange.
You can’t reverse a Bitcoin payment like a payment by Credit Card. That happens often enough with credit card payments for services thesedays. There is now a hard core of people who buy things with credit cards and ‘charge back’ months later, claiming it wasn’t them and getting their money back. Credit Card companies take the customers word for it and the company is left to hang out to dry. You can’t do this with Bitcoin. You can’t bounce a bitcoin or charge back a Bitcoin. You can’t forge a Bitcoin. You can’t receive it and claim you didn’t, like ever other coin-op vending machine you ever used.
Unlike old fashioned money, BTC arrives in minutes from distant clients and you can tell the minute they have sent it that its coming, even if they are in Kathmandu. For international transactions there are no multi-day banking delays for payments that may or may not have been sent. If its sent you have irreversible notice of that. That means you can ship straight away and telescope fulfilment times. What is more within minutes you can convert you Crypto into £ or $ with no outrageous currency conversion gouging by your friendly banksters.
Crypto is emergency tolerant. BTC payment worked for a US Florida client of ours even during a recent hurricane while his US bank was evacuated. All they needed was cellular connectivity.
That leads on to the fact that for B2B ‘fiat money’ keeps business hours. Bitcoin is 24/7/365, the banking system is not. The blockchain works weekends, holidays and evenings, like our international sales staff and our websites.
So lets agree Bitcoin and mainstream Crypto is a solid means of exchange. It has many advantages over classic money, but also drawbacsk. The fact is that it is a valid, fast, cheap and powerful new means of exchange.
So next up is ‘a store of wealth.’
A 1 Yen used to be a gold coin, so it seems almost ridiculous to point out that Bitcoin was $20,000 a year ago and is now $3400, so can’t be a store of wealth and therefore not money. Is money a good store of wealth? Not especially when you look at the history of money and its never-ending narrative of inflation and obsolescence. I actually collect money, its called being a numismatist and moneys ability to hold its value is definitely questionable as any average ancient Roman on the Omnibus would tell you about his silver washed numa.
However the argument is that Bitcoin isn’t a store of wealth, which is obviously wrong as I have wealth stored in it now. It was stored in it yesterday and last year and will be tomorrow. I can get a fist full of dollars with it at will. It might go up and down like Sterling or a Swiss Franc unpegged but it is nonetheless storing wealth far better than Venezuela’s money or Iran’s. There is no money whose value does not oscillate as a store of wealth and Bitcoin is no different. Being a store of wealth is actually a problem for Crypto because one of the flaws of Bitcoin and Crypto is you have to treat it like a bag of cash and hide it in digital pots like a medieval hoarder or risk the privations of intermediaries and other such robbers.
Finally there is the issue of Crypto being a ‘unit of account.’
Again it is self-evident you can use Bitcoin as a unit of account. Everyone of the 500+ crypto exchanges use Crypto as a unit of account. The blockchain which is the underlying technology is by definition a ‘ledger.’ Crypto is by definition a token and by design encapsulated on a ledger. To say a Bitcoin is not a unit of account is to say an abacus is not a calculating machine.
Bitcoin and Cryptocurrency is money. The only question is whether it is money with enough benefits to be used.
Its not actually unique. Think on the following:
Travellers cheques,
Casino Chips
Luncheon vouchers
Green Stamps
Hard Times tokens
…. The list of para-money is long as is the history.
What held these numa back was the barriers of entry to creating and sustaining money which can be a massively expensive task. Even so many such monies prospered for extended periods of time and some still prosper today.
Now most of these barriers to entry have gone and making a currency is nearly free unlike printing a trillion dollar of USD.
Crypto cannot be un-invented.