The reason you’re reading this article is that you already know something about Bitcoin. But, you’re probably unsure whether this virtual currency is real money. Essentially, Bitcoin is a virtual, digital, or electronic currency. It’s an online cash version.
Satoshi Nakamoto introduced Bitcoin as a digital form of money that would work without intermediaries like central banks. People exchange Bitcoin via a peer-to-peer network without any entity acting as a go-between, overlooking the transaction.
The absence of a bank or government that controls Bitcoin is a major attraction for some people. At the same time, this virtual currency uses blockchain technology to record all transaction information. Bitcoin users can also track their ownership of this virtual currency on the public ledger. Furthermore, the register is publicly accessible, meaning people can track their Bitcoin details. But can a person use Bitcoin as real money?
Is Bitcoin Money?
The answer to this question is an outstanding yes. Technically, Bitcoin is real money that’s entirely online. That means you can’t get physical Bitcoin coins or notes. However, you can buy things and pay for services using Bitcoin as long as an outlet accepts it.
Some businesses in countries like Canada, the US, the EU, and Australia accept Bitcoin. However, Bitcoin will go a long way to compete with traditional currencies like the Euro and the dollar. What’s more, countries like Vietnam, Russia, and China have banned Bitcoin because they don’t consider it a legit payment method.
While Bitcoin is a high-risk digital asset, some people have earned good profits from trading it on platforms like bitcoin equaliser software. Others use crypto exchanges to access, buy, and use Bitcoin in countries where governments have banned it.
What Makes Bitcoin Real Money
Traditionally, money serves several purposes that Bitcoin can also perform.
- Exchange medium: Money is generally a social contract. Society members have earned and used conventional money for thousands of years as an exchange medium. People take payments in the form of money because it’s socially acceptable. Thus, fiat money has the social consensus mechanism.
- Value storage: People use money as storage for their purchasing power. You can hold money for a long time and use it to finance your future payments. What’s more, you can save money because it assures you of its value when you decide to use it later.
- Value measure: Traditionally, people use the money to determine their wealth or purchasing power.
Today, people use Bitcoin for the above reasons too. And this means this digital asset is real money.
Characteristics of Money that Bitcoin Has
Bitcoin compares to traditional money because it also has the following characteristics:
- Durability: People consider something money if people can keep it without losing value. That’s why silver, metals, and gold are precious.
- Acceptable: The payee and the payer accepts money
- Divisible: People can divide conventional money.
- Portable: Individuals can hold and transport money.
- Uniform: Money has the same value, appearance, and specifications for a single unit.
- Stable: Money is hard to mint or mine like gold and has a limited supply
Bitcoin is real money because it has these characteristics. Perhaps, Bitcoin is better than traditional money because you can’t reverse a transaction after making it using this digital currency. That means you’ve no reason to worry about things like chargebacks after paying with Bitcoin, which isn’t the case for traditional payment methods like credit cards.
What’s more, Bitcoin payments are almost instant, making it an ideal option for international transactions. Additionally, you can convert your Bitcoins to conventional currencies like dollars and pounds without outrageous conversion fees.