Disclaimer: I am not a financial advisor. Please do your own research or consult with a financial advisor before making any serious financial decision. These are just the opinion of a regular guy on the internet.
*Taps the chalkboard*
Class is in session.
In part one of our lesson we discussed “hardness” and “softness” of money, as a lead-in to Bitcoin’s most important component.
But first let’s take a step back and talk about Bitcoin’s function as money, and how cryptocurrency will work as money in the near future.
“The Bitcoin Standard” describes money as having three distinct characteristics: unit of account, medium of exchange, and store of value.
First, money must be easily mergeable and divisible; put another way, I should be able to pay someone $1 million just as easily as I can pay out ten dollars.
If you’ve looked at the price of Bitcoin since the last post, you may have said to yourself: “There is no way I can afford Bitcoin, if it is priced at 19K.”
Well you don’t have to own a whole Bitcoin, due to the property of unit of account. Bitcoins are made up of smaller units called Satoshis (named after the creator of Bitcoin).
So, $200 will get you about 1 million Satoshi or 0.010 BTC; $9,000 would get you close to 50 million Satoshi, etc.
Second, we discuss medium of exchange.
Money of any kind must be widely accepted as a form of exchange, whether it be buttons, stones, ribbons, or candy.
Bitcoin was designed to be decentralized and used across the world and continues to be added by merchants as a medium of exchange.
Square and PayPal have garnered recent headlines, for purchasing large amounts of new Bitcoin supply. More importantly, Paypal has added functionality to buy, sell and hold Bitcoin, and allow its millions of merchants to accept Bitcoin as a form of payment.
Also, there are alternative cryptocurrencies, or “altcoins” specifically made for the purpose of acceptance of crypto as payment and can easily convert crypto into fiat (paper) money.
Wide acceptance from merchants will make Bitcoin undeniable as the money of the future.
Lastly, as I eluded to in the first blog, Bitcoin’s greatest factor is its store of value.
Bitcoin will be limited to 21 million total coins in its existence; there are currently 18 million in circulation, much of this has not moved for many years.
Scarcity factors into hardness of money, which means it will continue to gain in value as supply further diminishes.
Hopefully, I have convinced you to do more research and looking into Bitcoin and several other cryptocurrencies.
There are thousands crypto projects aiming to decentralize and solve many problems within the world today.
Try to find the ones with interesting concepts, good execution, and enough buzz while the price range is still low.
Weather Your Storm, Maintain Inner Reign -E.