The economic function of Bitcoin

[semes]

Bitcoins have different economic functions. It acts as a central bank. Bitcoins are known as fixed quantities as stocks have limited supplies. The rapid rise in prices has given us many different questions. What is the economic function of this algorithmic currency?

Exchange function of Bitcoin

Anyone with a bitcoin address can use bitcoin. It is impossible to know who controls each address. Therefore bitcoin must be freely exchanged. This means "sacrifice" that bitcoin has created. This free flow of capital can be from any source. This allowed the bitcoin to become worthless a few years ago.

When this currency is rising in value over time. This is due to the limited provision of bitcoins. While there is increasing demand for them. This is similar to how you bought Apple stock in 1980 during your IPO. You will have to pay $ 22 per share. Due to the limited supply of Apple shares and the increase in demand. Today it is valued at $ 520 per share

At present, Bitcoin is going down continuously, so is it a deflation?

How can it acts central bank? It is decentralized. So there is no need for central bank with Bitcoin. Only miners could be useful.

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[V1saya]

Bitcoins have different economic functions. It acts as a central bank. Bitcoins are known as fixed quantities as stocks have limited supplies. The rapid rise in prices has given us many different questions. What is the economic function of this algorithmic currency?

Exchange function of Bitcoin

Anyone with a bitcoin address can use bitcoin. It is impossible to know who controls each address. Therefore bitcoin must be freely exchanged. This means "sacrifice" that bitcoin has created. This free flow of capital can be from any source. This allowed the bitcoin to become worthless a few years ago.

When this currency is rising in value over time. This is due to the limited provision of bitcoins. While there is increasing demand for them. This is similar to how you bought Apple stock in 1980 during your IPO. You will have to pay $ 22 per share. Due to the limited supply of Apple shares and the increase in demand. Today it is valued at $ 520 per share

At present, Bitcoin is going down continuously, so is it a deflation?

How can it acts central bank? It is decentralized. So there is no need for central bank with Bitcoin. Only miners could be useful.

Maybe it meants the other way. When referring to central bank it meants that Bitcoin is the center of its own blockchain and no outsiders can change its system.

[KryptoKai]

The beauty of bicoin is that there is no central bank and no central authority. This is probably why satoshi walked away because he doesn't to take control of what is intended to be a decentralised economy

[piterpie]

The economic functions of the bitcoin network causes it to behave like a central bank. This has a few effects: bitcoins (the payment unit) behave like stock due to the fixed, known supply of units being subject to open market operations. What happens when the market price of bitcoin changes is the velocity of bitcoin falls into disequilibrium until a new equilibrium is found.

[KassandrHicks]

The function is bitcoin is almost as same as the fiat coins apart from that it's decentralised, that makes it an individual currency which is only used as an individual business product and it's purpose is to serve only the individual, nor any mass or country.

[Cacingkemi]

Not deflation that occurs and this will not continue to go drop as your words,the economic function of BTC is similar to fiat but for the freedom of every person to make a transaction not high taxed.In the past it was too little to know BTC so human knowledge was not wide as its now.So it's not worthless like your words but it's the initial process made,Like a toddler who is still in the process of walking and then becoming a teenager.

[gilangIDR]

Not deflation that occurs and this will not continue to go drop as your words,the economic function of BTC is similar to fiat but for the freedom of every person to make a transaction not high taxed.In the past it was too little to know BTC so human knowledge was not wide as its now.So it's not worthless like your words but it's the initial process made,Like a toddler who is still in the process of walking and then becoming a teenager.

Bitcoin does have many benefits and one of them is that the use of Bitcoin can avoid paying taxes. But this is also a negative thing because the government will get less income and this can be a big problem if someday Bitcoin is used globally.

Bitcoin must be used wisely because it will provide positive value for the development of the use of Bitcoin in the future.

[alex_gr_cc]

Bitcoins have different economic functions. It acts as a central bank. Bitcoins are known as fixed quantities as stocks have limited supplies. The rapid rise in prices has given us many different questions. What is the economic function of this algorithmic currency?

Exchange function of Bitcoin

Anyone with a bitcoin address can use bitcoin. It is impossible to know who controls each address. Therefore bitcoin must be freely exchanged. This means "sacrifice" that bitcoin has created. This free flow of capital can be from any source. This allowed the bitcoin to become worthless a few years ago.

When this currency is rising in value over time. This is due to the limited provision of bitcoins. While there is increasing demand for them. This is similar to how you bought Apple stock in 1980 during your IPO. You will have to pay $ 22 per share. Due to the limited supply of Apple shares and the increase in demand. Today it is valued at $ 520 per share

At present, Bitcoin is going down continuously, so is it a deflation?

I would not consider bitcoin as the central bank or Apple stocks. Bitcoin, as an investment tool, is more like gold. Although it is more technologically advanced and differs in functionality.

[Huskarls]

Bitcoins have different economic functions. It acts as a central bank. Bitcoins are known as fixed quantities as stocks have limited supplies. The rapid rise in prices has given us many different questions. What is the economic function of this algorithmic currency?

Exchange function of Bitcoin

Anyone with a bitcoin address can use bitcoin. It is impossible to know who controls each address. Therefore bitcoin must be freely exchanged. This means "sacrifice" that bitcoin has created. This free flow of capital can be from any source. This allowed the bitcoin to become worthless a few years ago.

When this currency is rising in value over time. This is due to the limited provision of bitcoins. While there is increasing demand for them. This is similar to how you bought Apple stock in 1980 during your IPO. You will have to pay $ 22 per share. Due to the limited supply of Apple shares and the increase in demand. Today it is valued at $ 520 per share

At present, Bitcoin is going down continuously, so is it a deflation?

this is one of the weaknesses of bitcoin, which is certainly the advantage of bitcoin, its price fluctuations. But most people interpret this to be too high, bitcoin, which like the end of last year experienced the hype and the market is sluggish so they blame the market

[Kakmakr]

"In economics, deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0%. Inflation reduces the value of currency over time, but deflation increases it. This allows one to buy more goods and services than before with the same amount of currency." - Source : https://en.wikipedia.org/wiki/Deflation

So based on this question - " At present, Bitcoin is going down continuously, so is it a deflation? " your assumption is wrong. The value of the currency must go up for deflation to happen. 

The Bitcoin price has gone up, if you look at the long-term historic price history. <Year on year> 

[eashikde]

Bitcoin opens up great economic opportunities. This is that increased security, global volume transactions, while the commission will be minimal. I think that the prospects are very good and therefore you just need time to see them.

[Froidda21]

Bitcoin has many economic functionalities. It can be be used as an investment scheme. It can also be used as a currency for trade in exchange of other currencies and goods.

[Haennon05]

There are many features of bitcoin which can act as a economic function. People can earn money through it and change their livelihood, there are many investment oppurtinities too and also it can be used in online shopping as a currency.

[Zendania14]

Bitcoin can work as a medium of exchange. So it does act as an economic function. The feature of investment also help in this matter.

[Thoakin09]

I couldn't find the corelation between OP and the title. Anyway, by definition it is showing inflationary characteristic due to price decrease. But when you consider it has fixed asset, you would realize that bitcoin is invariable deflationary.

[spongegar]

I don't think it is deflation per se, but it is more like a price correction for the ghastly spike. We experienced earlier this year. Next, Bitcoin and any crypto currency is not jist an algorithmic currency but the next currency. I think crypto currency and the blockchain technology could be big if allowed to be big.

[niko337]

Crypto is very novel technology. Might we see a central bank one day issue digital units of its currency in crypto form? Could happen. To put this in perspective though, crypto here is just a new kind of paper to print money on. Very clever, novel digital paper, but still just new paper.
Bitcoin as specific implementation of crypto has two basic use cases: a vehicle for speculation; a payments system for grey/black marekt participants looking to evade laws and taxes. As such it is and will always remain a niche item. Currencies are a creature of law, issuing forth from sovereign legal authority. Bitcoin can't challenge or displace them any more than a crowdsourced constitution could overturn established rule of law.

do check out "money vs currency" on youtube by Mike Maloney. It may appeal to you.
Paper money (currencies) was invented for debt. and subsequently widely used for fraud purposes.

Actually Central banks are creating their own cryptocurrencies as well. very soon we will dive into an era full of cryptos, just have to e careful which are the proper ones.

[niko337]

In the early years, many hyped up people in the public used "deflation" as a form of argument.
Actually the utility of bitcoin or any other cryptos doesn't actually create a deflation, it follows inflation and "correct" it with new variables in the equations so the economy remain simple but more tech-influenced.

It is also a way to earn extras into a user's pocket as well. It has the ability to create a new economy by itself if adoption increast to about 10% world population. That is what banks and central banks are afraid of.

[iTradeBit]

The basic economic function of bitcoins is the ability to be used as a remittance of money without the use of traditional banking system. The other function of it serving as a store of value and investment is not what bitcoin was created by satoshi to be but we made it so.

Absolutely agree.

[awik p]

In the early years, many hyped up people in the public used "deflation" as a form of argument.
Actually the utility of bitcoin or any other cryptos doesn't actually create a deflation, it follows inflation and "correct" it with new variables in the equations so the economy remain simple but more tech-influenced.

It is also a way to earn extras into a user's pocket as well. It has the ability to create a new economy by itself if adoption increast to about 10% world population. That is what banks and central banks are afraid of.

I agree. currently the data on bitcoin users is only about 1% of the world population. we can imagine if it increases by 10x, of course this should be anticipated by the government so that it does not cause turmoil