Bitcoin is digital currency or digital gold?

[Charles-Tim]

The volatility of Bitcoin makes me feel like it doesn't make sense as a form of digital currency. I'm open to hear why Bitcoin makes more sense as a digital form of currency.

This should not be the reason bitcoin should not be seen as a form of currency. Bitcoin is a currency in design. It can be made optional just like what El Salvador did when it made bitcoin a legal tender. But I believe if something like that exists, the government may be afraid because any mistake that will cause inflation might make people use bitcoin more.

[jimrome]

Is Bitcoin a store of value or medium of exchange? Or can it be both? I always thought Bitcoin made more sense as digital gold since it has all the benefits of gold yet none of the defects of gold.

Bitcoin was a medium of exchange even for tiny transactions and now it can be a store of value without much transactions to save the network from getting clogged   .

What are the defects of gold, i could not find any, if you think that the major defect is portability, it was the thing of the past, with Gold ETFs and Digital gold, it is portable as many platforms allow you to purchase fractions and can sell instantly.

The volatility of Bitcoin makes me feel like it doesn't make sense as a form of digital currency. I'm open to hear why Bitcoin makes more sense as a digital form of currency.

If you like it or not, it is a digital currency and for large international transaction you can use Bitcoin than any mode of payment. If you point any other mode of transactions for this specific use case, i am all ears.

[Russlenat]

Bitcoin was created to act as a decentralized, peer-to-peer electronic cash system and  be free from shadows of the banks, governments, or other central entities. But having a volatile nature for bitcoin, that becomes a barrier to make it happen as it would be hard to gain global adoption when there is no stability seen on its value. That led to the current usage for bitcoin as a good store of value and mark as digital gold.

So to answer your question, bitcoin can be labeled as both. But due to its volatility, it is mostly utilized as a store of value these days.

[Finestream]

I do not think that with the current state of bitcoin, price fluctuations here and there, it can highly perform as a medium of exchange or even as an alternative currency. It would only bring high uncertainty for the buyers when its value of the payment could easily jump or drop significantly, as well as for the merchants who will only be forced to frequently adjust prices or just accept potential losses in the long run.

But bitcoin can function as both, but maximizing its utility case as a digital currency wouldn't be too easy at the moment.

[SatoPrincess]

The volatility of Bitcoin makes me feel like it doesn't make sense as a form of digital currency. I'm open to hear why Bitcoin makes more sense as a digital form of currency.

To answer your question, Bitcoin can serve as both a store of value and as a currency. Bitcoin’s volatility is not the biggest challenge to bitcoin being used as a currency, the problem is unfavorable government policies and public perception of bitcoin.

[colinistheman]

The volatility of Bitcoin makes me feel like it doesn't make sense as a form of digital currency. I'm open to hear why Bitcoin makes more sense as a digital form of currency.

This should not be the reason bitcoin should not be seen as a form of currency. Bitcoin is a currency in design. It can be made optional just like what El Salvador did when it made bitcoin a legal tender. But I believe if something like that exists, the government may be afraid because any mistake that will cause inflation might make people use bitcoin more.

On the contrary, I think volatility is a real barrier and one of the main reason people hesitate to use it as a currency. Not many people would feel comfortable if their salary or payment received today suddenly lost its value in just a few day. That would cause a lot of inconvenience in life.
That is why over 92-95% of Salvadorans do not like using bitcoin as currency, even though it has been recognized as legal tender.

Essentially, Bitcoin can function as either a digital currency or digital gold. But due to its scarcity and volatility, it is clearly best suited to the role of digital gold.

[Bastketsrus]

I think it's currency because most of the time it's actually not that volatile. I mean, if Bitcoin was going up and down more than 10% during one day, it would be pretty hard to use it as currency, but if it's less than 5%, which is almost always the case, why not to use it? But we all know that it can be used as a store of value too, of course.

There are crash times when Bitcoin price can fall like 10% or bigger within several minutes but such crash times are not too often. In other times, more normal times, Bitcoin price usually does not have such big price change and it's possible for using bitcoin as a currency for a trade between two companies, two people. Like if they use fee rate at tip of Bitcoin mempools, the transaction can be confirmed around 10 minutes within that time, it's less likely that Bitcoin price would have a big crash.

As said, if they are concerning about price changes too much in meantime of a confirmation, they can reduce risk by using high fee rate for getting a quick confirmation in a next Bitcoin block rather than using low fee rate and wait hours for a confirmation.

Yeah that’s true, big drops can happen but not that often. Most of the time price moves are small enough to use it for payments if needed. Same with things like bitcoin betting, people just accept the small volatility and move on.

[Charles-Tim]

This should not be the reason bitcoin should not be seen as a form of currency. Bitcoin is a currency in design. It can be made optional just like what El Salvador did when it made bitcoin a legal tender. But I believe if something like that exists, the government may be afraid because any mistake that will cause inflation might make people use bitcoin more.

On the contrary, I think volatility is a real barrier and one of the main reason people hesitate to use it as a currency. Not many people would feel comfortable if their salary or payment received today suddenly lost its value in just a few day. That would cause a lot of inconvenience in life.
That is why over 92-95% of Salvadorans do not like using bitcoin as currency, even though it has been recognized as legal tender.

Essentially, Bitcoin can function as either a digital currency or digital gold. But due to its scarcity and volatility, it is clearly best suited to the role of digital gold.

On the contrary? There is nothing that should be contrary about what I posted. I understand what you posted very well about bitcoin, but the thing is, that should not be the reason bitcoin should not be used as a currency which is the reason for my post. Bitcoin is a currency in design, it should be used for it. People should decide if they will use it or not.  That is what my post is all about.

[suzanne5223]

I do not think that with the current state of bitcoin, price fluctuations here and there, it can highly perform as a medium of exchange or even as an alternative currency. It would only bring high uncertainty for the buyers when its value of the payment could easily jump or drop significantly, as well as for the merchants who will only be forced to frequently adjust prices or just accept potential losses in the long run.

But bitcoin can function as both, but maximizing its utility case as a digital currency wouldn't be too easy at the moment.

I don't see the fluctuation in Bitcoin's price as a barrier for merchants to accept BTC as a medium of exchange, because fiat currencies also fluctuate in price, and there is no problem that doesn't have a solution.
Merchants can use payment processors like BitPay and Strike that automatically convert BTC into local currency at the time of sale or hold the Bitcoin accepted during high prices as profit till the next halving market.

[retreat]

It is a digital currency. While many people view it as a store of value due to its potential long-term value, it is still primarily a digital currency that serves as an alternative to fiat currency, as clearly explained in the Bitcoin whitepaper. However, if someone views Bitcoin more as a store of value, that is not a problem, because Bitcoin can indeed serve that purpose, even though it does not alter its role as a digital currency.

[Gaza13]

Bitcoin certainly offers both, as you mentioned above, but it's more proportionally important for storing your wealth. Yes, Bitcoin could be considered or equated with digital gold and digital currency. With its four-year halving, which makes it increasingly scarce, it's similar to the difficulty of mining physical gold. Bitcoin volatility is often a major obstacle for some who view it as a daily currency, while fiat money ideally offers stability for transactions and pricing. Bitcoin is certainly superior, free from control, and conceptually sound, unlike traditional fiat systems, whether in terms of withdrawal restrictions, security, or account freezes. This system can be far more reliable than traditional systems.

[bitcoindusts]

Is Bitcoin a store of value or medium of exchange? Or can it be both? I always thought Bitcoin made more sense as digital gold since it has all the benefits of gold yet none of the defects of gold.
The volatility of Bitcoin makes me feel like it doesn't make sense as a form of digital currency. I'm open to hear why Bitcoin makes more sense as a digital form of currency.

Bitcoin is created to be a currency, being a currency it holds both characteristics, being a store of value and a medium of exchange.  So I do not think we have to weigh which one Bitcoin is since Bitcoin is both. 

Now look around us, is Bitcoin being used as medium of exchange?  Short answer is yes, so from that Bitcoin is a medium of exchange.  In addition we can also look around and see for ourselves how people use Bitcoin as a store of value.  There is no doubt there are lots of members here hold into Bitcoin to preserve the value of their wealth while at the same time rake profit in due time when the value of Bitcoin goes up.

[Aymoons]

What are the defects of gold, i could not find any, if you think that the major defect is portability, it was the thing of the past, with Gold ETFs and Digital gold, it is portable as many platforms allow you to purchase fractions and can sell instantly.

When you put money in a gold ETF, you don't own the actual gold. You are buying shares with the hope that the fund you are buying through doesn't collapse and lose the money that you put in. There is a huge counterparty risk, compared to bitcoin which is decentralised and has no counterparty risk as a form of digital gold.
Gold ETFs only trade during stock hour exchange timings, it is not 24/7 like Bitcoin where you can buy or sell at any time and any day.

[Dr.Bitcoin_Strange]

Bitcoin has its special benefits, while gold also has its own too. Bitcoin can not used in nake jewelry just gold it used for making so many products that is sold in the market. Bitcoin is a store of value and also fits as a digital currency, if you hold Bitcoin for a long time, the chance of making profit is there and if you also want to accept Bitcoin payments in your business, you can do that  or when you are looking for a business that accepts Bitcoin payments, you will get. So, it serves both purpose.

[macson]

Let's ditch the narrative that Bitcoin is digital gold. I simply don't think it's necessary to think of Bitcoin as anything else. Bitcoin is Bitcoin. If you're more inclined towards its appreciation, let's consider it an investment/store of value. That "digital gold" narrative is simply a misleading one, as Bitcoin doesn't emulate gold in any way.

Bitcoin stands on its own and has distinct characteristics that make it valuable and trustworthy.

[Sonia_123]

Is Bitcoin a store of value or medium of exchange? Or can it be both? I always thought Bitcoin made more sense as digital gold since it has all the benefits of gold yet none of the defects of gold.
The volatility of Bitcoin makes me feel like it doesn't make sense as a form of digital currency. I'm open to hear why Bitcoin makes more sense as a digital form of currency.

Bitcoin remains a store of value and a decentralized currency which transaction has to be within two parties and not three, due to its scarcity, people see it as digital gold, it also a medium of exchange , it uses Blockchain to verify it's ownership and secures transactions and it can be broken into tiny units.

[Sanitough]

Bitcoin has its nature to function as both. It is originally designed as a currency, and while working on its global adoption, people are also taking advantage on it by using it as a profitable investment tool that increase its price as years go by.

However, bitcoin as a digital currency may not be maximized due to how volatile its price moves in the market. But if you are dealing with a bitcoin holder or investor as well, then its favorable on their part if you will pay using bitcoin because that means additional bitcoin on their portfolio.

[OcTradism]

Bitcoin has its nature to function as both. It is originally designed as a currency, and while working on its global adoption, people are also taking advantage on it by using it as a profitable investment tool that increase its price as years go by.

However, bitcoin as a digital currency may not be maximized due to how volatile its price moves in the market. But if you are dealing with a bitcoin holder or investor as well, then its favorable on their part if you will pay using bitcoin because that means additional bitcoin on their portfolio.

It's natural selection and decisions from people because when they understood How is the 21M bitcoin cap defined and enforced as well as where they are in the chart of Bitcoin supply vs time, they will realize that they are in a good time of investment, even earlier investment than later comers with better advantages.

Especially if they knew this Satoshi per dollar chart, they will have more motivation to buy, store and hold bitcoin as investment asset after realizing that the US dollar for example, and other fiat currencies have decreasing purchasing power with time while oppositely Bitcoin has increasing purchasing power over time.
https://charts.bitbo.io/satoshi-per-dollar/

[Rustam Meraj]

Market largely views Bitcoin at moment as akin to Digital Gold, by virtue of its total 21 million supply limit and security. Moving and verifying with Gold is difficult, however, it is only couple of clicks with Bitcoin.
On Medium of Exchange section, you are correct on volatility, that no one would purchase cup of coffee with BTC this time around, only to discover following week that same type of BTC would be able to purchase car. Nevertheless, Layer 2 solutions such as Lightning Network are solving currency aspect of it. This enables payments in real time at low cost with primary Bitcoin network remaining as secure settlement layer. Consider that Bitcoin layer 1 is represented by gold bars in vault, and Lightning Network is described as digital currency that is spent on everyday transactions. With increasing market cap and maturity of Bitcoin, volatility will diminish and hence easy to use as day to day currency tomorrow.

[fuyuasha]

Is Bitcoin a store of value or medium of exchange? Or can it be both? I always thought Bitcoin made more sense as digital gold since it has all the benefits of gold yet none of the defects of gold.
The volatility of Bitcoin makes me feel like it doesn't make sense as a form of digital currency. I'm open to hear why Bitcoin makes more sense as a digital form of currency.

Yes