Is Cryptocurrency A Viable Currency?
For months, Bitcoin has been grabbing headlines. Rapid price fluctuations have prompted a heated debate about whether it is a currency or a fraud. Is bitcoin sustainable as a currency in the long run, or might we see the bursting of a bubble?
The answers to these queries are unmistakable: Yes, bitcoin is a currency, but we don’t know how long it will be. It does, however, possess several characteristics that may make it profitable in the near future.
There must be no debate about referring to bitcoin as money any longer. A currency is essentially a thing that is used as a means of payment, which means that people exchange it for the products and services they desire.
Bitcoins are used as a means of exchange online by thousands of people worldwide.
The Worth of Cryptocurrencies
Any discussion of Bitcoin’s worth must address the basic nature of the currency. Gold was considered valuable as a currency because of its intrinsic physical properties, although it was inconvenient. Although paper money was an advance, it required manufacturing as well as storage and lacked the adaptability of digital currencies. Money’s digital evolution has shifted away from physical qualities and toward more functional characteristics.
Although much remains to be discovered about this emerging technology, cryptocurrency has now become a global phenomenon in recent years. There are numerous issues and worries about the technology that has the potential to disrupt existing banking systems.
Are Bitcoins Fairly Valued?
Bitcoin’s market price is very volatile and vulnerable to substantial price changes. As a logical consequence, the market price at any particular time can deviate significantly from its justified or intrinsic worth. Nonetheless, oversold markets tend to recover, and overbought markets tend to cool off over time. As a result, without the benefit of hindsight, it is impossible to assess whether Bitcoins are adequately valued at any one time.
Why Does Bitcoin Have Value?
Bitcoin lacks the support of government agencies, as well as a system of intermediate banks to spread its use. In the Bitcoin network, a decentralised network of independent nodes is in charge of authorising consensus-based transactions. There is no fiat authority, such as a government and perhaps other monetary sovereignty, to serve as a counterparty to risk as well as contribute to making lenders whole if a transaction goes wrong.
However, cryptocurrency is extremely rare and cannot be spoofed or counterfeited. The only way to make a fake bitcoin is to execute a double-spend.
The Bottom Line:
The future of Bitcoin, or rather any cryptocurrency, is very much in doubt. Promoters see boundless possibilities, while others see only peril. While Bitcoin has some money-like characteristics, economists and authorities remain sceptical that it is now acting like money. This is reasonably anticipated due to the fact that only a small number of transactions are made in Bitcoins, and only a small number of items are valued in Bitcoins. In contrast, people trade Bitcoin in massive quantities and transfer money over the network, with minimal business activity regarded in the market.