Crypto Babbelblox: Is Bitcoin suitable as a means of payment? – BLOX

Bitcoin is often hailed as the ultimate means of payment and a perfect store of value. You can send the money anywhere in the world and it has a maximum amount; therefore, no inflation takes place. However, these things can work against each other. What’s up with that?

Bitcoin as a means of payment

A new block is added to the Bitcoin blockchain approximately every ten minutes. It stores transactions of people sending Bitcoins to each other. It doesn’t matter if someone sends it to the other side of the world or if it’s your neighbor who gets the Bitcoins; it’s all that easy.

The blocks that make these transactions possible are “found” by computers that crack mathematical codes. The first computer to crack a code receives a reward for this proof of work. Currently it is 6.25 Bitcoins and every 4 years this reward is halved (the halving). These are therefore the only Bitcoins that will be added.

Bitcoin as a store of value

What many people don’t know is that there are already almost 19.3 million BTC in circulation. Compare this to the maximum number of 21 million Bitcoins and you know that 92% of all Bitcoins have already been mined (!!!). As a result, supply can only increase by 8%, while demand can increase indefinitely.

This makes Bitcoin the ideal store of value for many people. Because if the demand will only increase – and the supply remains largely the same – it will ensure that the price of Bitcoin can increase significantly in value.

Why do these contradict each other?

If you put this against Bitcoin as a means of payment, something is not right. Because if Bitcoin is ideal for storing value, why would you still use it as a means of payment? You’re not going to throw away something that you know will be worth more later.

It is simpler with the euro: it loses value every year due to inflation. So it’s easier to use it and not feel guilty. In addition, many also choose to invest these euros in something that can increase in value – Bitcoin, for example.

As a result, the two ‘use-cases’ of Bitcoin appear to contradict each other.

Answers from our BLOX experts

The question of the title of this article arose through a conversation at the coffee machine, and we will explain the answers below:

Jerry Marcus

“The way I look at it, the use case is not black or white,” says Jerrymie. “The Bitcoin tool is different in all areas. For example, now it is a store of value in Argentina, but tomorrow (via the Lightning Network) it can be a means of payment in Lebanon, where the banks are closed. It depends a lot on the situation.”

“Suppose Bitcoin is worth 1 million euros, then spending a sat (small part of Bitcoin) doesn’t matter anymore. It’s a relatively small amount of Bitcoin you spend. But at the moment Bitcoin as a means of payment in the Netherlands is actually only for purists who have ideological arguments.”

Thomas Derks

“The fact that you can carry bitcoin on your head and send it to the other side of the world within 10 minutes makes it unparalleled in my opinion,” explains Thom. “Compare that to gold, which basically performs the same functions, but gold has an annual inflation rate of 1-2 percent, storage is relatively expensive, and it takes days to ship it to the other side of the world.

“In addition, you also have to check it for authenticity. In that sense, Bitcoin is an improved and more efficient version of gold. To me, that is Bitcoin’s most important use case; guaranteed scarcity that you can sell anywhere in the world within ten minutes.

According to him, this does not have to make Bitcoin less suitable as a means of payment. “In principle, it makes no difference whether you pay with euros or Bitcoin. You could also have used the euros you use for payment to buy Bitcoin.”

How do you think about this? Tell us in the comments!

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