What’s the nature of currency?

[Semar Mesem]

Money is an object that is agreed upon by its users as (means of exchange), even if it is made of a piece of stone or wood.

Likewise with the presence of bitcoin which is predicted to be a currency (means of exchange) and will be accepted throughout the world if an agreement is born to use it.

Yes that's right, as long as there is a community that accepts it then it is considered money, bitcoin has a community of up to 150 million and this is a power that cannot be underestimated, the impact is clearly seen that there are many restrictions and banned bitcoin but it does not bring any effect, instead bitcoin users continue increase.

[AicecreaME]

1.The essence of currency is a value anchor. When you pay labor or produce something, the market will naturally give you a price corresponding to your payment (value manifestation)

2.The essence of currency is liquidity. For legal currency, it is done by the bank. His transmission medium is commodity circulation and capital circulation.

3.The essence of currency is credit, which is more effective for world currencies or super-sovereign currencies mentioned in forums.

4.

Musk said that the essence of currency is a commodity that can serve as a general equivalent.

5.I may also say that the essence of currency is rights. Whoever has a strong fist, whose weapon is advanced, whose technology is advanced, whose country is powerful, is what he says, and everyone must abide by it.

I agree with what you listed. These things are all possessed by bitcoin. However, it still isn't counted and acknowledged by the government as a currency. Perhaps because they have their own local currency in fiat in the first place. Since bitcoin and other crypto aren't issued by the central organizations, they aren't accepted as such.

Currency functions as an anchor of value and as a commodity in general. Many countries have their own currency and what they have to do is to sustain, maintain, and boost their economy to retain its face value in relation with dollar. Although the problem with traditional currencies (physical money) is that it is prone to inflation. Meanwhile, crypto is lesser prone to inflation which makes it a better option to store funds.

Hopefully, the countries all over the world will soon notice that bitcoin and other cryptocurrencies are currency because it can also do what fiat can do.

[fullhdpixel]

now the use of cryptocurrencies is still prohibited as a means of payment.

In simple words, more merchants are now accepting payments in cryptocurrencies as compared to the early days. Yes a lot of countries are still allowing purchase through Bitcoins directly but there are companies like BitPay who are facilitating it.

seeing the demand for it is getting bigger as an investment instrument.

Bitcoin to me is more of a currency than an asset and the simple reason is because if transactions aren't made on the Bitcoin blockchain, it would simply signal the end of Bitcoin. The demand is more because adoption is still miles behind where it should be. A dollar in crypto like USDT trades superior to a dollar in PayPal. Now think about it, the dollar value remains the same but still, there's a discrepancy.

If you need $100 in PayPal for BTC, most traders will do it gladly but vice versa is really hard. This tells me that crypto/bitcoin is more a currency than an asset in nature.

[jostorres]

I don't think people should be considering bitcoin as a gold in "digital world". This will just encourage people to use bitcoin as a store of value that will appreciate overtime. If this happens, we will never be seeing bitcoin used as a regular mainstream currency.

I do agree that bitcoin should be seen as a thing to use as well as storing it as well. However, I do not think that gold payments are 100% gone all over the world and even if it is, it was not like that back in the day. It means that there was a period where people both used gold to store their wealth, but also used it to buy things as well. Do not think about now, to make it easier think about 2000 years ago, very wealthy people had a lot of gold stored somewhere but they also spent gold to buy stuff as well, Crassus was literally buying whole neighborhoods with gold when it was burning.

Long story short, bitcoin could be digital gold, just not the way gold is used right now, it is the gold that was used 2000 years ago, it is both spent for buying/selling stuff, but if you have excess amount of it, then you store it as well. Not every dollar is used neither, most of it is stored somewhere, same logic here.

[CaptainCrapper]

There are five risks in the use of Bitcoin:

(1) Policy risks. The decentralized nature of Bitcoin may threaten the traditional monetary system, affect the government's macro-control capabilities and reduce fiscal revenue;

(2) Legal risks. At present, Bitcoin is only protected by the laws of various countries as a virtual commodity rather than a currency;

(3) Speculation risk. Bitcoin does not have national credit or physical assets as protection, and the price may fluctuate sharply, which is extremely risky for investors;

(4) Money laundering risk. Bitcoin has the characteristics of anonymity and freedom from geographical restrictions. It is difficult to monitor the flow of funds, and it will be very easy to circumvent government supervision;

(5) Substitution risk. Bitcoin still has defects such as lack of credit guarantee, poor security performance and easy to cause deflation. At the same time, it has to face the competition of various emerging altcoins, and there is a greater risk of substitution.

The policy is nice actually when fast introduce anything one our market we cant reach the main position or main objectives. when we understand the situation we see it's too late for us. I learned something new good from your post thank you.

[fullhdpixel]

The problem is that bitcoins is not stable in is price, the volatility is quite high for a currency to be used in every day purchases. If the value of bitcoins fluctuates in a few weeks from 30 to 50,000 USD then people will not just spend their bitcoins to purchase a meal or some new clothes. As long as their is a big upside potential most of the people owning bitcoins will do so as investors. Which makes it very similar to Gold, there are many opportunities to actually use Gold to buy things, but people rather use it to store value and save money.

A really good point, it can’t be used for day to day purchases. And moreover if the price should go from something like $30 to 50,000 USD I can imagine so many people using that day spend on a lot of things and buy their dream house and cars, and the price will still dump. And sellers will be the ones to suffer it because when they sell a product and collect bitcoin for payment, the value might drop all of a sudden which will put them in position of loss.

So for something like this, they won’t consider accepting bitcoin or any cryptocurrency as a payment method, because they are more likely to be the ones to face the consequences if they don’t happen to exchange it for fiat immediately.

[famososMuertos]

The role as invention was something revolutionary and undeniably transcendental in the economy of the regions that adopted it in its beginnings, something so simple and fragile gave a hard blow to the currency at the time (!?) ... no, both have coexisted over the years.

Yes indeed! When analyzing what the role has meant today in its diversification not only at the economic level is amazing. (Do not confuse the history of paper with papyrus or parchment)

For me the role, papyrus, the parchment were the Blockchain at the time, keeping the technological and ideological distances that exist, the papyrus and the parchment ancestors, but because of its natural configuration to produce them and the cumbersome to store them the paper turned on a change but it occurred in centuries.

For around 500 years ⁽¹⁾ Only the Chinese produce the paper ... Incredible, think about it 500 years!

Eyy! but let's not forget the currency, there are several references of his invention for many centuries before Christ (BCE), but as an officer something like what he did "El Salvador" doing legal to Bitcoin and added in 2021, it was CRESO⁽²⁾ To the Sovereign Lido is recognized the fact of having been the first person to put into circulation an official currency for the first time in the history of humanity.

... In short, the point or better to say the points are:
It should be recognized that what exists today (and what existed) as tools of economic and technological value can not be despised in a (theoretical) breakthrough of Bitcoin to acceptance as a global use currency.

Yes! Bitcoin is a great invention at the 21st century but with a lot of stretch ahead to equate traditional...then "officially" talking we should have a speech and have an afforded community to put the bitcoin In each of our regions and doing something to achieve it, but most only walk philosophically or that Bitcoin reaches the moon.

@RainbowKun nobody loves Bitcoin more that myself, but I think we must have more execution in the action that the word ... By the way to not get out of the subject; Not in several things you say at "OP" , for example:

... Currency Is A Contract Between The Owner and the Market Regarding ... (taken from the OP) Contract? No, really not, the value of the currency is intrinsic in its value, point, in the antiquity there was a phrase that was reference to that literal, it is worth your weight in gold.

Nothing is registered using currency, in fact the invention of it came to overcome in the reason of simple barter.

Other point: Consensus today, is necessary and absolutely necessary in the architecture and development of Bitcoin as a technology to advance to the economic and social future that is intended, we can not continue having breaks on the individual in that consensus in its technological development (scalability) Lee about That, in a certain way although they have not affected Bitcoin those "bifurcations" that have occurred are a brand, a tattoo that as individuals It is difficult to have objectives in common for the good of the collective.

Now imagine achieving the consensus on the global level is difficult, really difficult but it is happening and it has everything to be it but we do not know when?, How? And it is even possible that as a historical reference we are at the coin level, although with what happened with El Salvador, we can advance for a few centuries and start in the Creso⁽²⁾ era.  

And it is here where you put another "cane" as a church shepherd who wants to do miracles by touching the front of the people, saying "... finally it will be accepted by all ..." And then you put the difficult consensus; Bitcoin can become global to be everywhere...
...for Bitcoin being everywhere you do not need that consensus, it is not necessary, in fact "El Salvador" is a demonstration of it, but maybe the best example is the "$" ...

Edit:
(1) source:https://en.wikipedia.org/wiki/Paper
(2) Source: https://en.wikipedia.org/wiki/Coin
others sources:
https://en.wikipedia.org/wiki/History_of_money
https://bitcoin.org
bitcointalk.org
OP.
IMHO.

[jaysabi]

Bitcoin doesn't exactly have an efficient way to measure "consensus" and further, there's a major difference between what bitcoin users might think versus a consensus by miners,

Full nodes are responsible for overseeing and verifying that consensus rules are being respected. Miners create blocks and include transactions whose validity is again controlled by the full nodes.   

There's a status quo which, for reasons that have nothing to do with consensus, is very difficult to change.

It's difficult to change because you need a huge majority of the community to agree to the change. It's not like when you vote for a new president and the person with 52% comes to power. You need much more than that in Bitcoin.

It's also difficult to change because interested parties will never vote on something that decreases the decentralization or network security of Bitcoin.

I don't know if you mean to dispute my point or not, but your post supports the same premise.  Why things are difficult to change isn't as important as the fact that it's difficult to change.  Regardless of why, the inflexibility of bitcoin is why it's still a slow and clunky crypto and why it hasn't been able to incorporate improvements that other crypto's have introduced.

[Pmalek]

Regardless of why, the inflexibility of bitcoin is why it's still a slow and clunky crypto and why it hasn't been able to incorporate improvements that other crypto's have introduced.

Bitcoin changes slowly, yes. But it's not going to change faster if it's threatening any of the main pillars that I mentioned above. Bitcoin changed to incorporate SegWit, we now have the Lightning Network, and soon we will have Taproot and Schnorr signatures.

When you talk about the improvements in altcoins, those changes can make them faster and cheaper, but to they make the networks more secure? Many altcoins have suffered 51% attacks and many others could be subjected to them with very little cost. Bitcoin doesn't do rollbacks, altcoins have. Bitcoin isn't centralized, many alts are + they are premined.     

[jaysabi]

Regardless of why, the inflexibility of bitcoin is why it's still a slow and clunky crypto and why it hasn't been able to incorporate improvements that other crypto's have introduced.

Bitcoin changes slowly, yes. But it's not going to change faster if it's threatening any of the main pillars that I mentioned above. Bitcoin changed to incorporate SegWit, we now have the Lightning Network, and soon we will have Taproot and Schnorr signatures.

When you talk about the improvements in altcoins, those changes can make them faster and cheaper, but to they make the networks more secure? Many altcoins have suffered 51% attacks and many others could be subjected to them with very little cost. Bitcoin doesn't do rollbacks, altcoins have. Bitcoin isn't centralized, many alts are + they are premined.     

There's definitely low hanging fruit here bitcoin can address. Faster blocks and bigger blocks would easily scale the network and allow it to be used for commerce more easily, and would also solve the cost efficiency problem.  For all the promise of lightning network, the implementation hasn't solved any actual issues on a practical level.  Its use-case in practice is a very small minority of transactions, so the bulk of transactions in bitcoin remain neither fast nor cheap.  On top of that, I'm just not convinced the trade off between decentralization and speed has proven either necessary or worth it.  There's not a problem with traditional centralized payment processors to the point where the world needs a decentralized immutable option.  To the extent the world wants one, there are currently better options than bitcoin due to bitcoin's consensus-based refusal to adapt.  In some respects, the consensus system offers benefits, but generally more in what I would call a hypothetical sense as the practical drawbacks at this point continue to heavily outweigh the potential benefits.  (Of course, in my extreme minority opinion.)

[Rasa nanas]

Money is an object that is agreed upon by its users as (means of exchange), even if it is made of a piece of stone or wood.

Likewise with the presence of bitcoin which is predicted to be a currency (means of exchange) and will be accepted throughout the world if an agreement is born to use it.

Yes that's right, as long as there is a community that accepts it then it is considered money, bitcoin has a community of up to 150 million and this is a power that cannot be underestimated, the impact is clearly seen that there are many restrictions and banned bitcoin but it does not bring any effect, instead bitcoin users continue increase.

To become a valid currency or legal medium of exchange it must be generally accepted and guaranteed by the government in power. if only the bitcoin community accepts it that means bitcoin is not generally accepted. and it seems that there is still no government that has officially guaranteed that bitcoin is legal tender.

[CapGelatik]

Money is an object that is agreed upon by its users as (means of exchange), even if it is made of a piece of stone or wood.

Likewise with the presence of bitcoin which is predicted to be a currency (means of exchange) and will be accepted throughout the world if an agreement is born to use it.

Yes that's right, as long as there is a community that accepts it then it is considered money, bitcoin has a community of up to 150 million and this is a power that cannot be underestimated, the impact is clearly seen that there are many restrictions and banned bitcoin but it does not bring any effect, instead bitcoin users continue increase.

To become a valid currency or legal medium of exchange it must be generally accepted and guaranteed by the government in power. if only the bitcoin community accepts it that means bitcoin is not generally accepted. and it seems that there is still no government that has officially guaranteed that bitcoin is legal tender.

If we hope that in the near future cryptocurrencies can become legal tender it seems impossible,
for sure there are many factors that make the government in every country have not legalized it,
maybe it will take a long time for this to happen but it's definitely better to just keep following the progress

[jaysabi]

Bitcoin doesn't exactly have an efficient way to measure "consensus" and further, there's a major difference between what bitcoin users might think versus a consensus by miners,

Full nodes are responsible for overseeing and verifying that consensus rules are being respected. Miners create blocks and include transactions whose validity is again controlled by the full nodes.   

There's a status quo which, for reasons that have nothing to do with consensus, is very difficult to change.

It's difficult to change because you need a huge majority of the community to agree to the change. It's not like when you vote for a new president and the person with 52% comes to power. You need much more than that in Bitcoin.

It's also difficult to change because interested parties will never vote on something that decreases the decentralization or network security of Bitcoin.

Yes, there are always two most important things in the Bitcoin network. The first is decentralization, and the second is security. This is the basis of Bitcoin's value and the basis of Bitcoin's consensus. If these two points are lost, Bitcoin will no longer be valuable. At present, the Bitcoin technology itself has proven its value, and there is currently no force that can tamper with the data of Bitcoin and crack the private key of Bitcoin. On the other hand, Bitcoin is also becoming more and more decentralized, because Bitcoin is currently being dispersed in the hands of more people.

In the beginning this may have been true, but bitcoin today is more of a self-fulfilling prophecy than anything else.  It has value simply because it has reached a critical mass of people who believe it has value.  It's not the decentralization and security that keeps the value either, it's just that there are enough people who bought into the premise to keep it there.  Now it's just a speculative asset, relatively few people actually use it for its intended purpose (actual commerce), which is where decentralization and security would actually matter.

[Pmalek]

There's not a problem with traditional centralized payment processors to the point where the world needs a decentralized immutable option.  To the extent the world wants one, there are currently better options than bitcoin due to bitcoin's consensus-based refusal to adapt.

Bitcoin is at the top of the pyramid. The community has put it there and they are keeping it there. It leads the race in market capitalization and trading volume, so people are obviously OK with what they get when they use bitcoin. If a time comes where the community decides to shift to something else or a majority of users abandon bitcoin for some other asset, the devs can ask themselves why that happened. 

[inoes]

Cryptocurrencies and money can all have value if agreed upon.  The nature of other assets such as stocks, gold, silver, debt securities and others will also be valuable if one party and the other party have an agreement that it is valuable.  Can bitcoins be abandoned?  It's very possible if there are no more miners and people using it.  Likewise with money if the state/organization that issued it is no longer trusted by the public.  It's a very simple world.

[kendedese]

Money is an object that is agreed upon by its users as (means of exchange), even if it is made of a piece of stone or wood.

Likewise with the presence of bitcoin which is predicted to be a currency (means of exchange) and will be accepted throughout the world if an agreement is born to use it.

Yes that's right, as long as there is a community that accepts it then it is considered money, bitcoin has a community of up to 150 million and this is a power that cannot be underestimated, the impact is clearly seen that there are many restrictions and banned bitcoin but it does not bring any effect, instead bitcoin users continue increase.

To become a legal currency it must meet many conditions, one of which is having a stable value. The value of bitcoin which is very dependent on supply and demand certainly makes the price of bitcoin unstable. besides that there are still many requirements that bitcoin cannot fulfill in order to become a legal currency.

[RainbowKun]

Money is an object that is agreed upon by its users as (means of exchange), even if it is made of a piece of stone or wood.

Likewise with the presence of bitcoin which is predicted to be a currency (means of exchange) and will be accepted throughout the world if an agreement is born to use it.

Yes that's right, as long as there is a community that accepts it then it is considered money, bitcoin has a community of up to 150 million and this is a power that cannot be underestimated, the impact is clearly seen that there are many restrictions and banned bitcoin but it does not bring any effect, instead bitcoin users continue increase.

To become a legal currency it must meet many conditions, one of which is having a stable value. The value of bitcoin which is very dependent on supply and demand certainly makes the price of bitcoin unstable. besides that there are still many requirements that bitcoin cannot fulfill in order to become a legal currency.

In my opinion, the future must not be Bitcoin itself becoming legal tender, but a legal tender built around Bitcoin. For example, in the construction of any legal currency, bitcoin must be anchored and the bitcoin can be mortgaged to issue the corresponding currency. Because in the future, the majority of people only believe in the credit of Bitcoin. Just like the over-collateralized stablecoins that are now issued. This is the direction in which I think humanity will evolve in the future currency system.

[lixer]

In my opinion, the future must not be Bitcoin itself becoming legal tender, but a legal tender built around Bitcoin. For example, in the construction of any legal currency, bitcoin must be anchored and the bitcoin can be mortgaged to issue the corresponding currency. Because in the future, the majority of people only believe in the credit of Bitcoin. Just like the over-collateralized stablecoins that are now issued. This is the direction in which I think humanity will evolve in the future currency system.

I do agree that legal tender is way too much and we should not be going towards that, but I do think that there is a good chance crypto could be an alternative that we should all be supporting and using. Think about it this way, can you spend bitcoin or other altcoins to buy something? Obviously we can, it is not just for investment, it is for sending/receiving, earning/spending and all of that, this is why we should be very happy about what we have right now. That doesn't mean that we need something bigger or we do not need it, we should definitely look to grow but we could always be something alternative without being an alternative.

Let's see what companies will end up accepting bitcoin, if there are many companies that accept bitcoin then we could potentially get a good result from that without ever being legal tender.

[CaptainCrapper]

There are five risks in the use of Bitcoin:

(1) Policy risks. The decentralized nature of Bitcoin may threaten the traditional monetary system, affect the government's macro-control capabilities and reduce fiscal revenue;

(2) Legal risks. At present, Bitcoin is only protected by the laws of various countries as a virtual commodity rather than a currency;

(3) Speculation risk. Bitcoin does not have national credit or physical assets as protection, and the price may fluctuate sharply, which is extremely risky for investors;

(4) Money laundering risk. Bitcoin has the characteristics of anonymity and freedom from geographical restrictions. It is difficult to monitor the flow of funds, and it will be very easy to circumvent government supervision;

(5) Substitution risk. Bitcoin still has defects such as lack of credit guarantee, poor security performance and easy to cause deflation. At the same time, it has to face the competition of various emerging altcoins, and there is a greater risk of substitution.

Just I want to add one point hare If anybody Hacked his secret key then I can tell he will lose his own all of the asset its a very bad nature of BTC or ETH if anyone wants to to reserve his own asset just need to more security I think to need BTC wallet 2fa key and also need to 2FA for Eth wallet if anyhow hacked her wallet he can recover everything.

[Celinena]

The essence of currency is consensus. Because currency has the consensus of the people, it can be circulated. Because the U.S. dollar has the consensus of various countries, it can circulate in the world without it,Now Bitcoin is the same, because people's consensus on Bitcoin is increasing,The stronger the Bitcoin price, the higher the price of Bitcoin,I haven't heard the term consensus before, but after reading this article, I think it makes sense.