Does bitcoin (btc) fulfill the properties of money money definition for kids
In 2017, several schools and companies announced their intentions to recognize Bitcoin (BTC) as money by accepting it as a form of payment. However, countries such as India have clarified that they do not recognize it as a currency. “The government’s position is clear, we don’t recognize this as legal currency as of now,” said Arun Jaitley, the finance minister of India.
Also in 2017, Japan took a step to revise their banking Act. Section 3 of the Act stresses the recognition of Bitcoin (BTC) as a legal tender. By definition, a legal tender is the something that may be used as a medium of payment backed by a legal system or law. In other words, the monetary status of Bitcoin (BTC) depends on where it is favored by the law
The question, “Is Bitcoin money?”, will be answered with the help of the actual properties required to be defined as money. Officially, money must possess three properties, Medium of Exchange, Unit of Account and Store of value.
There has been a school of thought that believes the value volatility of Bitcoin (BTC), and its questionable intrinsic value, disqualifies it as a store of value. To them, the value of Bitcoin (BTC) changes within the blinking of an eye, and this can lead to a great loss of value (or luckily a great gain of value).
In 2013, the volatility of Bitcoin (BTC) became 10 times higher than stock. During that same year, its exchange rate increased by 4 or 5 times in relation to the dollar and yen.
Jamie Dimon, the CEO of JP Morgan (NYSE:JPM), some time ago labeled the cryptocurrency as “fraud”. Critics suspect it to possess a “fake” store of value. However, Bill Gurley, a venture capitalist, is in agreement with those who firmly argue that Bitcoin (BTC) is an incredible store of value. “I think of it as an incredible store of value in the rest of the world,” he said. “I don’t think it’s irrational,” he added.
Bitcoin (BTC) as a medium of exchange is something that has already been happening, though it is criticized for lacking protection from fraud for its users. Apart from that, it has been routinely used for online payments, perfectly living up to that standard.
The use of Bitcoin (BTC) as a payment option is free from government manipulation. After cryptocurrency was invented and started gaining popularity, it became the subject of two main functions: investment and payment. On most of the Darknet marketplaces, Bitcoin (BTC) is the most accepted medium of exchange due to its anonymity. Based on this alone, it is obvious that Bitcoin (BTC) satisfies the demand for this property of money.
The two main properties, store of value and medium of exchange, have developed two schools of thought on the grounds of increased block size.
Those that recognize Bitcoin (BTC) as a store of value, are in disagreement with the increase in its block size. To them, the transaction fee does not have any “say” on the converted value. While those that see it as a medium of exchange, support the idea to increase its block size for quick transactions.
The last property of money is the unit of account or the measure of value. For anything to be recognized as money, it must have the tendency to represent the value of commodities. The finance minister of Germany has declared that “Bitcoin is a Unit of account.” Bitcoin in relation to the US dollar is highly volatile, and when used as a measure of any commodities, the commodity is subjected to a hyperinflation. Bitcoin (BTC) can easily be considered a measure of value when exchanges are made in units of Bitcoin (BTC) without necessarily being converted to a local currency. When a conversion is made, there is a struggle to meet the demand of this property.
Even though Bitcoin (BTC) is used as money in many online platforms, its future acceptance as an official legal tender will depend on the properties above.
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