The world-renowned digital currency, Bitcoin, created in 2009 by the enigmatic figure(s) called Satoshi Nakamoto, has garnered much hype about its proficiency as a currency. So much that many countries are adopting Bitcoin’s digital currency model.
After the value of Bitcoin rose to thousands from 2017 to 2020, with one Bitcoin currently valued at over $50,000 and analysts still predicting that its value could rise as high as $400,000, many wonder if it isn’t time the digital currency became more than a payment currency.
Bitcoin was initially intended to be a payment method that was decentralized and secure as can be seen with various institutions like Tesla who is open to accepting the asset as a payment method for its electric cars. On the other hand is those who believe that the recent advancements in the world of blockchain and the increase in the value of a single Bitcoin, that the cryptocurrency has become a store of value. An example of such institutions is MicroStrategy, which has continued piling in on the coin as a way of hedging against inflation.
A good analogy is a difference between what can be done with a banknote or a gold bar. With Bitcoin as an electronic banknote, peer-to-peer payments can be made even with its high value. However, many believe the cryptocurrency should be like gold, a store of value without actual utility.
There are arguments in favor of both camps; with Bitcoin as a payment method, crypto enthusiasts believe they will be preserving the true spirit of Bitcoin and protecting the coin from becoming an obsolete and ultimately valueless digital item. While proponents of the Store of value camp cite Bitcoin’s spectacular rise and holding power, insisting that the coin can maintain long-term value even without being traded or used in any way.
Regardless of this, investors should note that Bitcoin has gained value when it acts as both a payment method and a store of value. Bitcoin’s decentralization and cryptographic features allow the coin to be easily mined, stored, and transferred. It is all carried out in a highly secure environment and free from government or bank interference, something neither gold nor fiat currency achieves. This, making it an attractive option as a store of value and as a payment method.