What kind of money is bitcoin?
I will consider Bitcoin as a representative money simply because they do not fit into the other two category at all. It is neither a commodity nor a value that has been guaranteed by the government since they do no interfere with Bitcoins.
Does it qualified as having 4 characteristics of money?
Well, let’s explore it one by one:
I will consider Bitcoin as a representative money simply because they do not fit into the other two category at all. It is neither a commodity nor a value that has been guaranteed by the government since they do no interfere with Bitcoins.
Does it qualified as having 4 characteristics of money?
Well, let’s explore it one by one:
It is a medium of exchange –I consider the main criteria something to be mediums of exchange are that it be robust and portable. Since Bitcoin is virtual, so it does fulfill this criteria.
I will consider Bitcoin as a representative money simply because they do not fit into the other two category at all. It is neither a commodity nor a value that has been guaranteed by the government since they do no interfere with Bitcoins.
Does it qualified as having 4 characteristics of money?
Well, let’s explore it one by one:
I will consider Bitcoin as a representative money simply because they do not fit into the other two category at all. It is neither a commodity nor a value that has been guaranteed by the government since they do no interfere with Bitcoins.
Does it qualified as having 4 characteristics of money?
Well, let’s explore it one by one:
It is a medium of exchange –I consider the main criteria something to be mediums of exchange are that it be robust and portable. Since Bitcoin is virtual, so it does fulfill this criteria.
Well, have a look at the chart. The huge fluctuation at the end of December last year made Bitcoin not able to fulfill this criteria.
The supply of Bitcoin is guaranteed to be stable therefore people may think that it has a store of value and a measure of value. However, they neglected that the demand for money also affect the currency. And I personally feel that demand is never going to be stable. And since it’s never going to be stable so there’s no way it will have a store of value and be a measure of value.
It can be a standard of deferred payment - This depends of individuals and probably only worked before the fluctuation.
I hereby conclude that it does not function as money according to criteria of classical economics. However, whether Bitcoin is consider as ‘money’ in real life is still very controversial. Even if they don’t fulfill all functions of money, as mentioned in the speech, there are some exceptions where people are accepting and recognizing Bitcoins.
So the question is, do money have to be ‘money’? (fulfilling ‘criteria’ of classical economics)
Other examples that were given in the speech in the speech that were used as currency?
· Starpoints (Starbucks)
o It has a medium of exchange;. In a way they ‘gurantee’ it and act as a ‘mini’ government in exchange for brand loyalty.
o It is a measure of value – Starbucks gives you indication of how many star points do you need in exchange for a coffee or other goods and services they offer.
o It has a store of value - They control the value of it and market where it can be spent, again, in exchange for brand loyalty so consumers know that they can save up starpoints and they can consumer it later and it will still be valid for a cup of coffee.
o Standard of deferred payment – In a way this could work, maybe not starbucks giving out ‘loans’. But maybe among individuals. They could use starpoints as standard of deferred payment as it does hold it’s value and they know what can it be exchanged for.
Do you things in your daily life in a way that matches at least one of the characteristics of money?
In my daily life, let’s see. I consider school’s smart card system to match all the characteristics of money.
It has a store of value – The school guarantees it. If we have RM8 in our account, we know that the value won’t change, as it’s virtual. And the school grantees the money won’t just disappear within the card unless you spent it.
It is a medium of exchange – the school computer accepts it every time you scan it and you can buy drinks or lunch with it.
It is a measure of value – Simply because the currency value is the same as Ringgit. We know that RM2 can buy us a drink and RM8 can buy us lunch.
It is a standard of deferred payment – It is, since it’s billed into our account after all.
I didn’t want to repeat all my points again and again that’s why it’s a bit short at the end*
The supply of Bitcoin is guaranteed to be stable therefore people may think that it has a store of value and a measure of value. However, they neglected that the demand for money also affect the currency. And I personally feel that demand is never going to be stable. And since it’s never going to be stable so there’s no way it will have a store of value and be a measure of value.
It can be a standard of deferred payment - This depends of individuals and probably only worked before the fluctuation.
I hereby conclude that it does not function as money according to criteria of classical economics. However, whether Bitcoin is consider as ‘money’ in real life is still very controversial. Even if they don’t fulfill all functions of money, as mentioned in the speech, there are some exceptions where people are accepting and recognizing Bitcoins.
So the question is, do money have to be ‘money’? (fulfilling ‘criteria’ of classical economics)
Other examples that were given in the speech in the speech that were used as currency?
· Starpoints (Starbucks)
o It has a medium of exchange;. In a way they ‘gurantee’ it and act as a ‘mini’ government in exchange for brand loyalty.
o It is a measure of value – Starbucks gives you indication of how many star points do you need in exchange for a coffee or other goods and services they offer.
o It has a store of value - They control the value of it and market where it can be spent, again, in exchange for brand loyalty so consumers know that they can save up starpoints and they can consumer it later and it will still be valid for a cup of coffee.
o Standard of deferred payment – In a way this could work, maybe not starbucks giving out ‘loans’. But maybe among individuals. They could use starpoints as standard of deferred payment as it does hold it’s value and they know what can it be exchanged for.
Do you things in your daily life in a way that matches at least one of the characteristics of money?
In my daily life, let’s see. I consider school’s smart card system to match all the characteristics of money.
It has a store of value – The school guarantees it. If we have RM8 in our account, we know that the value won’t change, as it’s virtual. And the school grantees the money won’t just disappear within the card unless you spent it.
It is a medium of exchange – the school computer accepts it every time you scan it and you can buy drinks or lunch with it.
It is a measure of value – Simply because the currency value is the same as Ringgit. We know that RM2 can buy us a drink and RM8 can buy us lunch.
It is a standard of deferred payment – It is, since it’s billed into our account after all.
I didn’t want to repeat all my points again and again that’s why it’s a bit short at the end*