Ist Bitcoin Geld?

In part five of our Bitcoin Basics series, we took a closer look at the legal situation surrounding Bitcoin . In this article, we want to discuss whether Bitcoin can be called a real currency or not. 

As we discovered earlier, Bitcoin is a P2P cryptocurrency that, thanks to its fundamental characteristics, is the next step in the evolution of money. 

Bitcoin was designed to act as a scarce digital asset. Much like gold and silver were used hundreds of years ago, Bitcoin was designed to fulfill the core properties of money. 

There are five properties that Bitcoin must fulfill in order to be used as money. These are:

Stability (it does not lose value over time) 

Transportability (It can be easily transported from one location to another)

Fungibility (every unit is identical to every other unit) 

Divisibility (It can be broken down into smaller units) 

Acceptance (The currency can be used for the exchange of goods or commodities) 

and scarcity (there is a limited supply and it is difficult to counterfeit).

In the modern world, neither Bitcoin, the US dollar nor the British pound have any inherent value. Value is only determined by a merchant’s willingness to accept a particular currency as payment for a transaction.

So, to summarize, we can say that currencies need something called utility . This in turn leads us to three key uses, which we can define as follows:

Investment

Any currency must be able to maintain its value over time. Gold is so valuable because of its rarity. In the past, paper money was weighed against weights of a valuable metal such as gold or silver. And even though that is no longer the case, we still call the price of gold on the market the “gold standard.”

Accounting unit

A unit of account is a universal unit with which we price goods on the market. For example, the dollar uses whole units (dollars) and decimal values ​​(cents). 

Exchange mechanisms

Finally, each currency must be accepted as a means of sending funds from one party to the next. For example, most companies conduct all their transactions in either US dollars or their national currency.

What makes Bitcoin real money?

Bitcoin satisfies all the main characteristics and practicalities needed to act as a currency, although the relative newness of digital currencies compared to flat currencies or precious metals creates some interesting challenges.

Bitcoin’s stability continues to be a quality feature. The cryptocurrency has managed to survive for 10 years since its debut in Satoshi Nakamoto’s white paper and the mining of the Genesis Block, surviving, at the time of writing, countless speculations that have labeled Bitcoin as nothing more than a “bubble.” 

Yet gold continues to set the standard of stability throughout human history and remains the most widely recognized form of universally accepted currency. Similarly, the US dollar has become perhaps the most widely recognized flat currency in recent years. 

Basically, Bitcoin is transportable in the sense that it can easily be sent from one place to another via the Internet. And this is much easier than with gold, flat currencies or other paper money. 

Bitcoin is only limited by internet access and represents the first time in human history that we have succeeded in creating a payment system that is not under the total control of one country or pits different currencies against each other.  

Gold and paper money are restrictive in the sense that it can be extremely difficult to transport these materials around the world, while flat currencies are often tied to complex agreements between banks and governments that result in long transaction times or a high fee when transferring from one currency to another. 

Bitcoin also has a high degree of fungibility, as each bitcoin can be exchanged for another bitcoin, just like the US dollar. There is nothing special about a particular bitcoin, just like there is nothing special about a particular dollar bill. 

However, this property is now under massive threat as comprehensive analytics software can trace the history of every Bitcoin in the blockchain. In theory, this means that people could refuse to use a Bitcoin that has been used for illegal activities. 

There are some projects that attempt to address these concerns by increasing the confidentiality of each transaction. If transactions are private, then the history of a particular coin cannot be tracked – which, in turn, alleviates concerns about fungibility.

Bitcoin can be divided up to infinite values ​​- the lowest value (0.00000001 ฿) is called a satoshi – and then offers greater divisibility than gold or flat currencies. Typically, gold is difficult to divide into small units due to the process of re-minting (creating smaller units) or smelting (combining smaller units into a larger unit), both of which are very labor-intensive. Similarly, the US dollar can only be divided into 100 cent denominations. 

$10.5 trillion dollars

Lastly, Bitcoin is scarce from Natus , as there will only ever be a total of 21 million Bitcoins. The price of gold is elastic in the sense that deeper gold mines become more profitable as the rarity and price of gold increases, while there is already an estimated $10.5 trillion dollars in circulation.

These properties make Bitcoin useful as it can act as “digital gold” (or a store of value ) and its scarcity makes it a unit of account while Bitcoin as BTC can be used to price the value of a commodity and can easily be used as an exchange mechanism to conduct uncomplicated transactions over the Internet.

Who accepts Bitcoin?

Perhaps the biggest challenge that Bitcoin still has to overcome is achieving wider acceptance. While many merchants or service providers around the world accept payments in their national currency or in international currencies such as the dollar, Bitcoin remains a currency on the rise and is, as of now, not yet accepted as a means of payment by many merchants.

However, this has not stopped many service providers and merchants from accepting Bitcoin as a means of payment.  

There is a rather famous story of a hungry customer paying 1000 BTCs for two pizzas in 2011, and since then many more service providers, merchants, and even payment processors have accepted Bitcoin. Among them are names like Microsoft, Virgin Galactic, PayPal, and even Zynga.

And as the value of Bitcoin continues to rise, we will most likely see the currency become more widely adopted in the coming months and years.

In part seven of our Bitcoin Basics series, we discover how much Bitcoin is worth and how this value is created.