Bitcoin, the pioneer cryptocurrency has often been promoted as a better currency model than fiats which can either be used as a medium of exchange or a store of value or even a tender with which you can trade, a true all-rounder in every sense.
2018 bearish trend might have dented its store of value proposition, but when you compare it with the timeline of the most prominent store of value, which is gold, the progress chart still has a better upward graph.
So, the question is which side of the Bitcoin is more prominent, the medium of exchange or the store of value? We will try to analyze both the sides and then reach an evidential conclusion.
Bitcoin’s Progress as a Medium of Exchange
Bitcoin was presented to the world as a decentralized money model, where the peers on the network are responsible for executing, processing and taking care of every aspect which we need the bank for. The first significant use of bitcoin originated on the dark web, and as its value gained momentum, it made its way to the mainstream vendors in a very quick time frame.
As of today, the total number of vendors accepting Bitcoin has reached over 100,000. That’s quite a significant achievement for a technology which is just a decade old and has been criticized for the most part.
The reason for being such a successful medium of exchange lies in the technology of decentralization. In order to use Bitcoin, one does not need to approach a bank, the network works on the Distributed ledger technology and one can easily send money from their wallet to the vendor within a matter of few seconds.
Bitcoin works even better when it comes to international payments of a hefty sum, while your traditional bank might take a few days to initiate and process the payment, you can do the same amount of payment on Bitcoin network in a matter of a few seconds, thus proving it to be a better and convenient form of medium of exchange.
The processing time had become an issue in recent times, as the number of users on the network has increased significantly, since 2017 price rise. The development of the Lightning network as an off-chain solution is being seen as the perfect scalable solution as of now. once the LN is completely developed it would take away a huge burden from the mainnet.
Bitcoin’s Progress as a Store of Value
Bitcoin started at a value of $0 in 2009 and remained at that value for a few months before seeing some upward moment. Since then, Bitcoin has seen many ups and downs as in the case of any new technology but surprised and amazed everyone in 2017 when it peaked a price of around $20k. A tender which has no real-world entity backing its value, rising to $20k was not just phenomenal but quite confusing to many as what lead to such a high.
The answer is technology and the acceptance, while gold as a store of value has reached a trillion dollar valuation, Bitcoin in its few years of existence has taken significant strides to dethrone Gold in the years to come.
Many early investors who realized the potential in technology invested in it and the 2017 peak made them millionaires and billionaires depending on the investment they made. Even after one of the longest crypto winter where bitcoin saw its prices and market valuation being cut down by a significant 80%. Despite these factors, people are still bullish about the Bitcoin and some even believe that the next bull run would take it prices so high, that it might become unaffordable for most of the people in next generation.
Bitcoin has progressed both as a medium of exchange and a store of value in its decade long career. The acceptance is growing exponentially and thus the number of vendors, not just online but even offline, especially at tourist destinations, the use of Bitcoin as a medium of exchange has grown beyond many peoples expectations.
The store of value depedends on the market and in the present scenario, even when the prices are quite low from its all-time high, the valuation is tremendous, and once the next Bull run take over the market, it is expected to touch new heights again.