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  • Carolina Pérez

"Bitcoin: investment or payment system?"

Updated: Jan 15, 2019


Satoshi Nakamoto is known as the creator of the world’s first digital cryptocurrency; Bitcoin (BTC). The idea behind his vision was mainly to create peer to peer electronic cash that would eliminate the third party when doing a transaction. Ever since I´ve heard and begun learning about cryptocurrency, it´s more common to link this digital currency to investment. Even crypto exchanges provide a platform where traders can look at the market and put their buy and sell orders; some traders dedicate their entire day doing transactions, others want to buy and hold crypto in hopes of making a good investment and gaining profit from it in the future. Sure this is not the only thing being done with crypto you can also buy certain goods and services, but for the most part, I believe it in the investment area.


Is this really why crypto was created?


According to the BTC white paper, “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.” I believe this is being accomplished nowadays with transactions that are occurring on a daily bases. Nonetheless, crypto is mostly used as an investment method rather than being used as cash for everything.


“The line between money and financial assets is not always clear. In fact, money is a type of financial asset—one that is highly liquid (used to make payments) but that typically pays little or no interest.11 Other types of financial assets are less liquid but offer the potential to pay returns. For example, people buy stocks and bonds with the expectation that they will earn interest, receive dividend payments, or sell the asset at a higher price in the future. While Bitcoin was originally developed to function as currency, there has been a noticeable increase in demand from those who buy Bitcoin as a speculative investment.” 


The noticeable investments that people are making in crypto and speculations on its price has made many want to jump in while there is still time. Last year was BTC peak price, and with it came many allegations of it being a Ponzi scheme or a financial bubble. I believe for many the peak in its price was surprising or even worrying especially for those who are not into cryptocurrency. Nonetheless, crypto and blockchain have opened a spectrum of possibilities and developments that I believe are here to stay and to transform commerce, bureaucracy within the financial system and much more.


I associate this with our adoption period; crypto is still unknown for many; thus it´s not going to be an easy process if crypto is going to be recognized and used by everyone as a standard payment method for goods and services. In every creation, some modifications are made after its release, and the original project begins adapting itself to where it will be implemented. Many things work against it; it’s a complicated technology for everyone’s understanding, not to mention society is used to the current financial system, and this does not mean that a new system is not wanted by many. I don’t believe crypto being used as an investment is a bad thing; efforts are being made within the crypto world to make this digital currency friendly for users and businesses; pointing towards this can’t be forgotten.


Hope you enjoyed it, feel free to comment!


=)

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