Bitcoin is experiencing a downfall. However, it’s not about its current price, which at this time of writing rose up to 900%. It has a value of over US $12,000 per unit and uses as a currency. This appreciation is making for a rapidly puzzling situation.
Going back a few years ago, enthusiasts happily shared their triumphs from organizations that had started adopting bitcoin. However, records show that over the last couple of years, the number of these kinds of announcements dramatically decreased. Those businesses that had adopted this kind of currency have been dropping it.
The BBC in London contacted ten firms that previously advertised for adopting bitcoin. Four of them stopped accepting it, and the other two businesses said that they barely received payments in Bitcoin. The same thing proved online. Morgan Stanley stated in a report in The Wall Street Journal that for the top 500 global internet merchants, there are only three that accept Bitcoin. This record dramatically dropped from five the previous year.
Bitcoin’s rapid appreciation
Questions asked about what could possibly justify Bitcoin’s rapid appreciation due to its increasing adoption as a currency. Many supporters advocated for the use of Bitcoin as a store of value. This defines economics as an item that users can use to transfer purchasing power from the present to the future. In other words, you should always save your money somewhere it won’t depreciate.
Just like apples, they can use barter services with nearby residences while they are still fresh. But as time goes on, they can rot, which will cause their purchasing power to disappear. Its future purchasing power can maintain by trading apples for money, gold, government bonds, or other store value.
In any case, physical items or digital objects that make better store values have some attributes that others do not. Gold has good store value for the reason that it’s able to withstand pressure. Electronic bond certificates can also be durable if and only if the banks’ process does not experience a downgrade. To add to that, adding benefits for it to be easier to secure than physical values make it durable. Money is marketable, whether it’s a physical currency or digital bank money because when a purchase is in need, it converts easily.
Attributes
Bitcoin has many kinds of attributes that make it a good store of value. Similar to the offshore banking system, it is also known to offer a potentially high level of financial confidentiality. These types of attributes are very important attributes of a store’s value and are important to some people, but they also come with a lack of accountability and the potential for bypassing tax. Being valuable is the most essential attribute of a store’s value. Gold is popular for being valuable for having numerous industrial and decorative benefits. Its price is very volatile for speculation in the financial market, but it will never go back to zero. Because gold is a useful commodity, there will always be someone who will accept it.
Similarly, US government bonds are highly valued due to their relatively safe payment flow. Due to their global use as currency exchange, dollars and euros will always be valuable and may still be utilized in the near future. However, the Venezuelan bolivar’s future adaption is uncertain, forcing its inhabitants to search for better value retailers.
The fact that Bitcoin has no industrial or decorative uses and the fact that it doesn’t entitle the holder to receive interest raises the question of its valuable worth. The original plan was to make it a valuable currency that would adopt globally, but that isn’t happening. Its only major value was that it had only an exchangeable value. Nowadays, a lot of people have an interest in paying tons of money just to get hold of some Bitcoin.
Their investments only work with the hope that the next buyer on the line will pay a higher price for the existing coins. Once this process reaches its end, there will be no fundamental value to stop the coin’s price from dropping close to zero. The online drug trade and grey-area gambling have a choice to save their tenuous position of currency.
Beanie Babies
Bitcoin’s store value is upside down, making the idea valuable. In the real world, only valuable items have store value. People began to exchange Beanie Babies on eBay dating back to the 1990s. By the time of 1997, these limited-edition plush toys cost a thousand dollars, and with that, by the time of 1997, they reached roughly 6.6% of the entire site’s transaction volume.
Some people are expecting Beanie Babies to have a value that can preserve and more, urging them to invest their life savings into them. As time goes by, people come to their senses, making the market drop. Beanie Babies are popular for being useful and collectible toys, but this doesn’t mean that their value will worth thousands of dollars.
As of this writing, my personal advice goes to individuals and institutions tempted by the news to avoid investing in Bitcoins and other kinds of cryptocurrency and initial coin offerings (ICOs). Blockchain developers wouldn’t mind this advice for the reason that they treat speculative comments as a distraction. Gaining acceptance as a currency should be their main priority for Bitcoin to serve as a store of value.
