Characteristics of money bitcoin
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For its value and price, it entirely depends on its demand. The members of the ecosystem of bitcoin determine the cost and value of bitcoin in the market. Whether you want to give some transaction fee or not is entirely according to your choice. It is entirely voluntary. These are some of the characteristics of bitcoin, which makes it different from the traditional currency. Other than these characteristics, some other characteristics are similar to money, which makes bitcoin function as money.
Such characteristics are portability, durability, fungibility, recognizability, durability, recognizability, divisibility, acceptability, uniformity, limited supply. We are a team of writers passionate about innovation and entrepreneur lifestyle. We are devoted to providing you the best insight into innovation trends and startups. Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. Email adress:. Connect with us.
Share Tweet. Decentralization The first and most crucial characteristic of bitcoin is its decentralization. Fast As compared to other banks or any other method of transaction, bitcoin is faster. Non-repudiable What comes under this characteristic is if bitcoin is transacted once, there is no getting back unless the receiver is willing to do so. Digital Currency Bitcoins are not physically present in the form of notes or coins, unlike traditional money. Simple to set up Generally, banks take long documentation and procedures for in opening an account and managing it, including dealer records, credit checks, even they need many legal papers for identification of the user, but at the same time, you can make an address in bitcoin in a few seconds, without any need of any legal documents, you need to set a strong password and must not forget that password because once that password is gone.
Value is determined by demand There is no fixed value or price of bitcoin. Commission of own choice Whether you want to give some transaction fee or not is entirely according to your choice.
is a digital, decentralized, partially anonymous. It needs vendor acceptance, user acceptance and innovation. Hence, in terms of the nature of money, Bitcoin is accepted as money, with notes: it.
Related Topics: bitcoin Crypto currencies discover. Don't Miss Some amazing tips to know in Bitcoin trading. Startup Info Team. The 21 million units should be sufficient for large amounts of trade — accounting for its divisibility. Durable To function as an acceptable store of value, a proper form of money should not degrade over time.
Fiat Neutral The paper that fiat currency is printed on is not an ideal medium for a longer term store of value. It is easily damaged, wears out after repeated use, and will degrade if proper measures are not take for long-term storage. However, damaged notes are easily replaced, so the actual value that it represents is not destroyed. Gold Yes Gold bars will last hundreds of years with little maintenance. Gold coins may tarnish or become malformed with wear, however the metal itself will not degrade except under extreme conditions.
Refuting the ECB – The 9 Characteristics That Make Bitcoin Money
Bitcoin Yes Bitcoin is completely digital, so it will not degrade with use. Additionally, bitcoin wallets can be easily duplicated to prevent file corruption. Contrary to fiat, lost coins are not reprintable so extra care must be taken. Fiat Neutral Neutral For daily purchases, the money carried in a wallet will be sufficient. However, larger transactions require more elaborate measures such as armored trucks.
There is additional infrastructure available such as debt or credit cards, however these come with associated fees and are not really an intrinsic value to fiat — if gold was popular to use the same infrastructure could be applied to that, or even cattle. No Gold is heavy, and even more difficult to carry than fiat money. Gold No Gold is heavy, and even more difficult to carry than fiat money. Bitcoin Yes Bitcoin scales exceptionally well for larger quantities since it is completely digital. Additionally, bitcoins can be transferred almost instantly to a recipient anywhere in the world that is connected to the internet.
Divisible Few transactions in the world are for exact integer denominations. Fiat Yes Fiat is widely available in a large variety of denominations. Additionally, maintaining a variety of denominations in gold would be challenging due to storage concerns. Bitcoin Yes Bitcoin is currently divisible up to 8 decimal places, and could be extended further if the need arose.
Authenticity Verification Money needs to be readily identified and verified. Fiat Yes Most people are comfortable with the visual and physical identification of currency from years of experience handling it. Additionally, there are quick chemical tests using markers that can assist in identification. Gold Neutral As for commodity monies, gold is sufficiently different in color, weight and malleability from similar materials that these properties can usually be identified with a trained eye.
Chemical tests can be performed to prove authenticity, however the process is significantly more elaborate than the fiat test. Bitcoin Neutral Bitcoin cannot be visually identified since it does not exist in physical space. Additionally, physical instantiations such as paper wallets and casascius coins are difficult to verify the true quantity of bitcoins stored.
Storage In order to operate as a store of value, it is necessary to be able to store in large quantities. Fiat Neutral Because fiat currency does occupy physical space, they do require somewhat significant infrastructure to store. However their weight is relatively light, so this is easier than alternatives such as gold Gold No Gold requires large vaults to store high value. Gold is infamous for requiring significant infrastructure to guard and store, such as Fort Knox.
Bitcoin Yes Similar to the portability characteristic, there are no scaling concerns storing bitcoin. There may be concerns as the block chain gets larger over the years, however this should scale appropriately with advances in hardware.
Analysis of cryptocurrency’s characteristics in four perspectives
Fungible All units of the money must be considered equivalent, and equally replaceable. Fiat Yes All equal denominations are considered equal, i. Gold Neutral At a chemical level all gold is the same. However different purity levels and stamping authorities have to be take into account. Frequently gold bars are weighted to examine for counterfeits since only the surface of the bars are readily examinable. Bitcoin Yes Currently, all bitcoin are considered equal. There has been increased discussion about the purity of coins, and whether agencies should police transactions for stolen coins it is possible in the future that transactions will be penalized if stolen coins are mixed in, however this is still a significant way from implementation 8.
Difficult to Counterfeit In order to be a reliable store of value, the object itself must be hard to counterfeit. Gold Neutral While gold itself is almost impossible to counterfeit, there are numerous instances of gold bars being filled with lead or tungsten to reduce the true value of the asset. Frequently gold vaults will only test a small sample of the bars, so it is difficult to determine the true percentage of counterfeits.
Bitcoin Yes It is cryptographically impossible to counterfeit a bitcoin. The closest analogue would be attempting a double spend attack, where the recipient believes they received coins that were not actually transferred to their account. However, this has only occured once during the fork in March, and remains a low risk while the network hash rate remains high.
Widespread Use Lastly, money should be able to be traded for a wide variety of products and services. Fiat Good Fiat is accepted at virtually every location within its issuing country. Gold Bad It is rare that anything can be bought directly with gold. Bitcoin Bad Bitcoin is only accepted by a small fraction of web sites, and an even smaller fraction of brick and mortar stores.
While this number grows on a daily basis, it is still the vast minority of merchants. The Future of Bitcoin as Money Fiat currencies and gold have hundreds or thousands of years of established value as money. Subscribe For the latest analysis and updates. Fiat currency can only be created by a small group of people creating a limited supply, however the actual cost of production is low so it can be created in large enough quantities to be readily available.
Compared to other precious metals, gold exists in an ideal combination of being rare to find scarce , yet widely available people have found an abundance already. The supply of bitcoin is tightly controlled and highly predictable.
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The paper that fiat currency is printed on is not an ideal medium for a longer term store of value. Gold bars will last hundreds of years with little maintenance. Bitcoin is completely digital, so it will not degrade with use. Neutral For daily purchases, the money carried in a wallet will be sufficient.