It seems that bitcoin has become the digital currency of the future overnight! All over the world, more people are taking part in this global phenomenon. The fact that so many people love the idea of being able to trade and sell currency without the government or a central bank handling their money, is just one of the many reasons people are getting “on board” with bitcoins. Bitcoins can be used for both online and offline purchases and exchanges all over the world, even though they exist in a kind of “virtual reality”. This digital currency only exists in computer software, making it easier than ever to buy, sell, and trade across the globe- without a middleman!
Many Bitcoin enthusiasts are insisting that Bitcoin is indeed the currency of the future. With it’s decentralized banking system, it’s easy to see why Bitcoin has been creating such a stir.
When compared to Fiat currency (The US Dollar, Euro, and many other major currencies all fall under the category of Fiat Currency), Bitcoin is not doing too badly as a medium of exchange. Fiat currency is accepted all around the globe and Bitcoin is slowly making its way in the traditional market. Bitcoin is slowly being accepted internationally, giving buyers the option to use it like other conventional currencies. However, unless this acceptance grows worldwide, Bitcoin may struggle.
Is Digital Currency Stable?
One of the most important conditions for digital currency to be able to really take off, is that it needs to be stable. Bitcoin is a highly volatile currency, with its value changing every day-sometimes every few hours. In the past few years the value of Bitcoin has gone from $500 to $5000. Some people may find this digital currency to risky for their taste. However, some people, see this fluctuation as a good thing, especially since there is no type of centralized bank or government involved.
Numeraire basically refers to use of money to store value, sense measure or compare value. Some believe that it is tough to measure value; it resides only in human consciousness. Fiat currency is used for trading purposes and similarly, Bitcoin is now used for similar purpose. It is slowly taking over traditional currencies in many places around the world.
How is gold measured?
Gold, however, is not measured on what it trades for; it is measure by the standard of mass or weight. One gram of Gold is a gram of gold. It is important to understand here that Gold is measured by weight not by its purchasing power. However, fiat currency is measured by the number printed on its value also called the ‘face value.’
The hard truth about Bitcoin is that even if Bitcoin starts getting internationally accepted as a medium of exchange or it manages to replace traditional currency; it will fail to have any intrinsic measure similar to Gold. Gold is measured by its unchanging or try physical quantity. It is unique in storing the value for thousands of years, a unique quality. Even though Bitcoin will never measure up to gold, it may take the place of traditional currency in the future.