Since the advent of bitcoin, it has made general masses to wonder about the main use case. A basic question that came in every person’s mind was: Is bitcoin a transactional currency or a commodity to invest in? But over time, people naturally started investing in Bitcoin making use of volatile behavior to their advantage.
When the bitcoin was first introduced, the price of each coin was none. In its first year, Bitcoin’s value shot up by 1000% which caught people’s attention. Gradually, as more and more coins were mined, its value depicted an upward trend with little hiccups in between. Bitcoin reached a peak of $20,000 in late-2017 and later its value was reduced. Now after ten years of its launch, its price stands at $8,490 approximately.
Masses look for stability in a currency when using it as a medium of exchange. They want some kind of assurance that their currency will stick to its current value and not decrease or increase while they buy things. There is confidence that is built in their currency that then motivates them to use it as a medium of exchange. However, a continuous variation in the value of Bitcoin has discouraged people to use it as a transactional currency.
Bitcoin is a secure and decentralized digital currency that people can trust. People have confidence in the fact that there is no single monetary authority that holds the strings of the Bitcoin. It has the benefit of being used in the international market conveniently when compared to the conventional currencies that involve exchange rates while trading them internationally.
Where Bitcoin is secure and decentralized, unfortunately, it is not fast when it comes to transactions. A currency used for transactions is expected to have speedy transactions while the 10 minutes block addition time puts a huge barrier in front of bitcoin in this regard. In comparison, centralized alternatives like Mastercard and Visa are swift in global transactions. So this becomes one of the reasons why a person will not use Bitcoin as a transactional currency.
Investors look for profits in the commodities they are investing in over a span of time. However, Bitcoin has shown an upward overall price trend since its launch which has helped many investors get satisfied with their decision to choose Bitcoin. A continual variation in its value spices up things for the enthusiasts and investors, who forecast its future value based on their past experience or some kind of mathematical models and tools, to maintain their attention consistently. Thus, there is absolutely no harm in saying and declaring that Bitcoin is indeed a commodity. Even the SEC and other regulatory authorities have labeled it as a commodity recently.