Bitcoin as money? Skepticism...🤔
Now, please, before you attack me here and flag this, or write a mean spirited comment, I want to say right off the bat that I am ambivalent about Bitcoin, generally. I don't own any, and don't necessarily have a good or bad opinion of it. I am simply writing this to start a discussion, so please keep it classy!
Firstly, I am under the impression that Botcoin is supposed to be a form of money, or currency, and not a speculative asset. This troubles me and forms the basis for my skepticism because I am not sure how this can actually serve as a stable money. I understand money, and the aspects that are needed for something to be considered "money" and bitcoin does not possess them.
Bitcoin has had wild price/value swings, sometimes daily, sometimes weekly, and it never seems to be stable for a long period of time. How can this be treated as money if the value of it swings so violently? How can you ever form long term contracts around it? Business plans? Salaries? These are all questions I don't hear anyone asking, and I think that stability in value is necessary. For instance, if I decide to buy a car using bitcoin, and let's say bitcoin is valued at $2,200 the day I agree to buy a $22,000.00 car, I'd need 10 bitcoin. Let's say it takes a day to get the car, clean it, finish the paperwork etc and by the time we transact the bitcoin is now $1,400 that day. Do I suddenly need 15 bitcoin? This is why bitcoin being a medium of exchange is so perplexing. How can goods or services be exchanged with no stability in value?
Bitcoin is measured in dollars mostly, so is bitcoin rising in value or measuring the real or perceived decline in the dollar?
With the dollar floating freely against other state currencies, how does one value bitcoin if its measure is in a currency that in itself changes daily, albeit much less violently.Government capital controls, taxes, legislation etc. Cigarettes can conceivably function as money, but not legally. There are many laws against selling, reselling, or trading cigarettes. There are taxes, tax stamps and other statutory restrictions. What about income or capital gains taxes? Another subject nobody is talking about. How long before the government passes legislation that effectively taxes the gains made in bitcoin? What about the possibility of an outright ban? How could it ever be money if this happens?
Reliance on the internet. The internet is still the "Wild West" by many standards, and we have grown accustomed to having access to it all the time. What happens to bitcoin in the event that the internet is down long term, or the electricity is out? These are other questions people aren't asking. How can one rely on bitcoin as money if there are multiple avenues to lose access to it?
Business cycles. Bitcoin has only existed since 2009, and has not expirienced a meaningful recession, or a depression. It's hard to predict what will happen to the value of bitcoin or its stability until we see it perform during a contraction.
Unlimited currencies. I know bitcoin is limited in supply, but crypto-currencies are not. Nothing will stop thousands of these currencies from being developed, and many already have been. Bitcoin rules the roost, for the time being, but this doesn't prevent new ones or improved ones from taking the market share. If there are limited dollars chasing unlimited crypto-currencies, god only knows what can happen to the value.
Intrinsic value of zero. These bitcoins are Information, essentially just electrons, and have an intrinsic value of zero. The same goes for many fiat currencies, and here in lies the issue with any currency not backed by anything real: it comes down to confidence. People piling into bitcoin is based on the confidence that they can get more dollars sometime later in the future, most people are not piling in for a alternate currency.
This brings me to my conclusion. Bitcoin obviously has value, and obviously had performed well. There is no top to what it can go to, but there is also no bottom.
That's what makes me approach bitcoin as a speculative asset and not a form of money. I think over time there is unlimited potential in blockchain technology, and bitcoin can go to $1,000,000.00, nobody knows. Nobody knows if this is a fad, like tech stocks or beanie babies. It simply is too new to judge.
Please comment and correct me if you see flaws in my argument.
I give a try to an answer, I am no expert but I think I understand what you are saying. This is my understanding to what you wrote.
First: Money is something people belive in and that give value, also it has to have limited supply and can´t be reproduced to keep the value.
Bitcoin is backed by peoples belifs that it has a vvalue and can function as payment, it also has limited supply to keep the value.
Compare it to gold as a value transfer item. Then look at the dollar, does that have that?
Dollar was backed by the belifs of gold as payment, instead the goverment wrote debt notes with the promise that for everry note there was gold to back it up, so far so good. Now the dollar is not backed by a piece of gold and can be printed at will by goverment or counterfeit ones. It no longer have the basic rules for being money more then the peoples belief that it is. So in that sence bitcoin is "more real money" then the dollar.
And with electric problems and no internet, most people use creditcards and banks, they don't funktions without this eighter. So if that happens you can probably not access bitcoin or dollar, you would have to go back to a hard asset like gold for value transfer. So I would say that bitcoin is more real money then any fiat currency. If you don´t use metals that is harder to use for small and big transactions.
Added:
When it comes to changes in price, I think bitcoin will get more stable over time. But the error is to compare the price to dollar. If you buy a car and then you can´t say to buy it for 1 bitcoin and say the price change in dollar.
If you agree then you pay 1 btc and that will still be 1 btc in a week later or a month later. If you think like that you can say you payed 1 btc for the car but looking at it a year later you payed the double price for the car.
If you buy for dollar that always goes down in value, you will pay more dollar a year later for the same car.
To make it more clear what i mean, lets say you buy a pair of shoes 2 thousand years ago, it cost you 1 oz gold coin and if you buy shoes today it still cost 1 oz gold coin. But compare it in dollar the shoe price changed a lot.