Bitcoin - Medium of Exchange Vs Store of Value?

[hatshepsut93]

Can somebody explain (or provide a link explaining) how an inherently deflationary/appreciating asset (like BTC or Gold) can serve as a medium of exchange versus just a store of value?

Easily. People need and want to buy things. When you go to buy groceries, you don't think "I'd rather put those money into BTC". When you spend money on your hobby, you don't think "I'd rather buy some BTC".

Now, take a person who strongly believes that BTC will be the best performing asset for next decades. It would make no sense for them to hold large sums in fiat money in a bank, invest in stocks or funds. They would have most of their net worth tied in BTC. And when they would want to buy something, they'll just sell some BTC if they can't pay with it directly.

[1714048044]

1714048044

[todiefor17]

Both gold and Bitcoin can be a medium of exchange and an asset. We can consider anything as a medium of exchange if there is an agreement between the two parties to the exchange.
Bitcoin is more mobile than gold, the liquidity of bitcoin is worldwide so it is easier to become a medium of exchange.
Both gold and Bitcoin are good stores of value in terms of scarcity and limited quantity.

[AicecreaME]

It actually depends on the perspective of the person viewing it. Although to answer directly, bitcoin can be both a medium of exchange and a store of value. You see, many users are using it as a mode of payment in their purchases online that they wanted to secure anonymity and of course, convenience. Bitcoin is also used to buy several items and assets, although it just has a longer processing time and higher fees, but that's another topic.

Bitcoin can also be a store of value since it has a very promising potential. It is called a safe haven for a reason. Many people are already investing in bitcoin because they have seen its positive movement in charts. Personally, I see bitcoin as a good investment vehicle because it isn't prone to hyperinflation, unlike fiat money.

So, it will really be up to you if you want to use bitcoin as a medium of exchange or as a store of value. You do what you want with it in accordance with your needs.

[dmamigo]

I used to prefer Bitcoin to be both medium of exchange and a store of value but as of now the fees are so high, I find it cost-effective to transact using any other cryptos. If there is no question of disclosing my identity to the seller or the receiver I also use Paypal but only if the fees are on the lower side. Bitcoin is accepted widely than any other cryptos and even sometimes prefered against Paypal, so obviously it is great for the transaction.
Regarding the store of value, everybody in this world has seen the uprise of BTC valuation. Obviously, it is a great option for investment or store of value.
The usage completely depends on the users, whether they want to purchase Bitcoin to transact or to hold for value increase. As of now, it is a store of value for me only.

[Kittygalore]

It could be both in my opinion because it was proven to be a medium of exchange when Laszlo bought 2 Dominos Pizza for 10,000 worth of bitcoin. Store of value because even it still has it's worth even though it has been a decade already and it's much more worthy than the past.

[goldade]

While bitcoin was created just like any money you know and can handle and should be used as such, it is more or less still a store of value.
Presently, bitcoin is too expensive and volatile to be used as a medium of exchange. The thought of accepting some of bitcoin and then it loses value is enough to make a merchant run from it.
One major reason bitcoin is a store of value is also because of its volatility. The prospect of bitcoin increasing in value makes men use it as a store of value instead of as a medium of exchange.

[pealr12]

Btc right now is more of a store of value than a medium of exchange, many people who are buying btc is to hold for a better price, I doubt anyone will buy btc at let say 60k just to serve as a medium of exchange purpose,  at least for now btc is more of investment, those who buy are expecting a profit, reason why the market is manipulated.

[imstillthebest]

Btc right now is more of a store of value than a medium of exchange, many people who are buying btc is to hold for a better price, I doubt anyone will buy btc at let say 60k just to serve as a medium of exchange purpose,  at least for now btc is more of investment, those who buy are expecting a profit, reason why the market is manipulated.

if tesla didnt stop thier connection with btc and if btc didnt crash there would have been people that are buying btc for 60k just to buy a tesla car  and there are hodlers that will use their btc to buy too but even if without tesla and even if btc crashed ,
there are still people that use thier btc regularly as a medium of exchange .
in gambling for ex. we can see people gambling with btc , also in other merchants that accept btc .

[Oasisman]

Can somebody explain (or provide a link explaining) how an inherently deflationary/appreciating asset (like BTC or Gold) can serve as a medium of exchange versus just a store of value?

The answer is pretty simple and doesn't need any link for you to be convinced.
Bitcoin and Gold has been accepted or served as a medium of exchange simply because someone (merchant or a service lender) is willing to accept Bitcoin or Gold as a payment.
Though there are risks involved due to it's high volatility, but these people possessed a high risk tolerance.
And because of Bitcoin's high volatility, people are holding it and considered it as a store of value. I mean who doesn't want it? That's like saving in a bank with ridiculously high ROI.

Nevertheless, you can either do both. There's no need for any complex answers to your questions.
Everything that has value can be serve as medium of exchange, and everything you think It gains value as time passes by can be considered as a store of value.

[verita1]

This is a very useful article for OP.
It is worth noting that from the first time a person buys, sells or receives bitcoin, he can verify that:

Aside from the question of whether it is a store of value, a successful currency must also meet qualifications related to scarcity, divisibility, utility, transportability, durability, and counterfeitability.

https://www.investopedia.com/ask/answers/100314/why-do-bitcoins-have-value.asp

For what makes bitcoin as the asset, the best, the most eligible and accessible to any public.
We have verified it, it is only up to us to share because we believe in bitcoin to more people.
The governments of the world are wanting to digitize their currencies because their population is preferring bitcoin and cryptocurrencies.

[Hydrogen]

Can somebody explain (or provide a link explaining) how an inherently deflationary/appreciating asset (like BTC or Gold) can serve as a medium of exchange versus just a store of value?

What of the historical precedent of gold, silver and copper coins in circulation. Having a dual use as medium exchange and store of value.

Bitcoin fulfills a similar role. With the advantage of not having to store, secure or transport physical assets on hand.

The earliest historical example of proof of work algorithms (upon which bitcoin runs) being utilized as a medium of exchange and store of value.

Could be rocks hewn into coin shapes with hand tools. Which were utilized as a medium of exchange and store of value.

[perryxi2]

Bitcoin is a medium of exchange and personal wealth storage that has a relatively good return but is always accompanied by market volatility, it always goes hand in hand with fiat currencies. But I think it's a currency. Best currency and worth the investment.

[jostorres]

I used to prefer Bitcoin to be both medium of exchange and a store of value but as of now the fees are so high, I find it cost-effective to transact using any other cryptos. If there is no question of disclosing my identity to the seller or the receiver I also use Paypal but only if the fees are on the lower side. Bitcoin is accepted widely than any other cryptos and even sometimes prefered against Paypal, so obviously it is great for the transaction.
Regarding the store of value, everybody in this world has seen the uprise of BTC valuation. Obviously, it is a great option for investment or store of value.
The usage completely depends on the users, whether they want to purchase Bitcoin to transact or to hold for value increase. As of now, it is a store of value for me only.

I think the fees are going to be better but meanwhile we can use other crypto currencies as well, that would make things a lot easier for everyone involved. I personally believe that there is a good amount of chance we can get bitcoin fee under 1 dollar one day, it just needs to get those improvements on its blockchain, it is the one that is used the most in all of crypto so it is understandable that it is also the one that is the most expensive one, but I believe it will get better.

I also believe that we are going to move to more green friendly method as well, there are tons of crypto that is using mining and we all know how bad it is for the climate, but that will soon stop, if nothing else proof of stake will make it a lot easier as well. Let's see what will happen in the future, I believe it will go better in both ways hand in hand together.

[qwertyup23]

Can somebody explain (or provide a link explaining) how an inherently deflationary/appreciating asset (like BTC or Gold) can serve as a medium of exchange versus just a store of value?

Bitcoin has the potential to become a medium of exchange since it has monetary value in which people transact with it along the blockchain. In addition, the transaction takes place without the intervention of any third-party consensus which provide anonymity.

Bitcoin can also be regarded as a store of value given its significant value in the market. The reason on why its value is so high is because of its limited supply and the willingness of people to purchase it at its price. It can be stored for long-term investment which has provided good returns as proven by the past.

[RealMalatesta]

Bitcoin has the potential to become a medium of exchange since it has monetary value in which people transact with it along the blockchain. In addition, the transaction takes place without the intervention of any third-party consensus which provide anonymity.

Bitcoin can also be regarded as a store of value given its significant value in the market. The reason on why its value is so high is because of its limited supply and the willingness of people to purchase it at its price. It can be stored for long-term investment which has provided good returns as proven by the past.

Yeah, I see all of them as a store of value and not as a medium of exchange. The thing is that there is still fiat, and I don’t really think that bitcoin is going to replace fiat as the main medium of exchange. And as for gold, I am not even going to talk about that one, because gold doesn’t stand a single chance of becoming a main medium of exchange. When it comes to transactions, a fiat transaction is usually instant, when you make a payment with debit cards and credits, and even PayPal, they are always instant. Bitcoin is not instant, although there are also cryptocurrencies that are also instant, just like Tron and so many of them.

[Nunoluck]

For me bitcoin is qualify enough as medium of exchange and store of value. But you may agree or disagree with me because this is just my personal opinion. I have been using bitcoin as currency which is I use bitcoin (and other cryptocurrencies) to buy some goods and I also use cryptocurrency as investment, actually I think this is the best way to escape from world economic system which there is inflation every year that can make people who only have fixed income become poorer.

[paxmao]

Can somebody explain (or provide a link explaining) how an inherently deflationary/appreciating asset (like BTC or Gold) can serve as a medium of exchange versus just a store of value?

Firstly, bitcoin issuance is limited and until now deflationary, but that only happens due to the demand. Second, there is no reason why you cannot exchange goods or services with a deflationary asset. There is simply no obstacle to it for that - you pay in bitcoin and you receive something else. If there is plenty of demand the price goes up, yet that does not hinder the ability to use it.

The limitations come from the cost of transactions, the number of transactions per second and other elements of the network as it is today.

[oHnK]

Can somebody explain (or provide a link explaining) how an inherently deflationary/appreciating asset (like BTC or Gold) can serve as a medium of exchange versus just a store of value?

Firstly, bitcoin issuance is limited and until now deflationary, but that only happens due to the demand. Second, there is no reason why you cannot exchange goods or services with a deflationary asset. There is simply no obstacle to it for that - you pay in bitcoin and you receive something else. If there is plenty of demand the price goes up, yet that does not hinder the ability to use it.

The limitations come from the cost of transactions, the number of transactions per second and other elements of the network as it is today.

Another reason BTC is the best payment instrument today is because its value has continued to increase since its creation.  When the current fiat payment instrument that continues to be deified by economists.  And those who keep voicing that BTC is an asset that does not have an underlying asset even though it is clear that Fiat currently does not have a clear underlying asset other than a guarantee from the central bank.  Why do we trust the central bank when it is clear that inflation continues to occur and the value of money continues to decrease.  We clearly learn, how the concept of time value of money but we do not realize the great potential created in BTC.  There is no time value of money and the uniqueness of a decentralized system only exists in BTC.  That's why BTC can be a good medium of exchange and store of value.

[fiulpro]

Can somebody explain (or provide a link explaining) how an inherently deflationary/appreciating asset (like BTC or Gold) can serve as a medium of exchange versus just a store of value?

Well that definately depends on where you are using and WHO are using it , for some people I might be beneficial to do their exchanges for Bitcoins but I do think that this actually prevents them for really big opportunities, for example:- Incase where their value hits 100%+ then what are they supposed to do ? They will definitely be sad about how they did not use this opportunity to wait and sell. You cannot use them as a medium of exchange everywhere ofc there are limited opportunities and thus makes it a lot harder to strike a deal therefore what I do think is you can just use them as a store of value for the time being. It's not only more profitable but easier too.

[Similificator]

If you try to search the same thought of your topic in the forum, you will see that this has already been aswered quite a lot. And I am telling you, the answers you get from various members are mostly worth your time. I reckon that what you would mostly find are asnwers that are not very supportive and skeptical about bitcoin being a medium of exchange. This is because most of the people in this industry likes bitcoin the way it is now specially after experiencing the huge price pump and price crash which attracted even more people who love the idea of bitcoin being a store of value. Again, I suggest searching a bit, and I guarantee that you will have a good time reading great ideas regarding your inquiry.