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Coins have value because they can act as both a store of value and a unit of exchange.
Successful coins have six main attributes: rarity, divisibility, utility, portability, durability, and counterfeiting.
Bitcoin has value because it holds up well in these six characteristics, although its biggest problem is its status as an exchange unit. After all, most companies have not yet accepted it as a payment method.
Bitcoin's usefulness and convertibility are challenged by the difficulties surrounding cryptocurrency storage and exchange spaces.
However, if Bitcoin gains volume and captures 15% of the global currency market (assuming all 21 million Bitcoins are in circulation), the total price of each Bitcoin would be around 514,000.
A currency is usable if it is a store of value, or, in other words if it can be reliably relied upon to maintain its relative value over time and without depreciation. In many societies throughout history, commodities or precious metals were used as payment methods because they were seen as having a relatively fixed value.
Rather than requiring individuals to carry burdensome quantities of cocoa beans, gold, or other early forms of currency, societies eventually turned to minted coinage as an alternative. However, so many examples of minted coins were usable because they were reliable stores of value, as they were made of metals with a long shelf life and little risk of depreciation.
A currency is usable if it is a store of value, or, in other words if it can be reliably relied upon to maintain its relative value over time and without depreciation. In many societies throughout history, commodities or precious metals were used as payment methods because they were seen as having a relatively fixed value.
Rather than requiring individuals to carry burdensome quantities of cocoa beans, gold, or other early forms of currency, societies eventually turned to minted coinage as an alternative. However, so many examples of minted coins were usable because they were reliable stores of value, as they were made of metals with a long shelf life and little risk of depreciation.
While cryptocurrencies like bitcoin and ethereum continue to see increasing interest levels and adaptability globally, they appear to be failing as currencies.
In an interview with Bloomberg, Aswath Damodaran, professor of finance at the NYU Stern School of Business, compared a speculative investment to a stable currency: “If you put the currency in the pocket and you forget about it for a year, and then at the end of the year, if you put it out it shouldn’t have lost half its value.
A currency is a convenient and trustworthy medium of exchange and a storage medium for value. Even the most popular bitcoin crypto tokens have not turned into mainstream currencies for easy exchange and transactions, and their valuation has seen large swings.
Similarly, valuations are a big concern. A look at the value of bitcoin, the most popular cryptocurrency, reveals that it hit its peak of around $20,000 in December of last year, only to lose, over the next two months, almost two-thirds to less than $7,000. Another popular cryptocurrency, ethereum, has met with the same fate. From its peak of around $1,180 in January, it has tanked by more than 60 percent to levels of $380 by March this year.
Very informative
interesting info
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