Bitcoin is usable if it is a store of value, or, to put it differently. Today, Fiat is the largest global currency. Many governments and societies have found that the fiat currency is the most sustainable and is more likely to depreciate or depreciate in the short term.
Aside from the question of whether it is a store of value, a successful currency must also meet the needs of scarcity, distribution, utility, transportation, stability, and counterfeiting. Let’s take a look at these features at a time.
Table of Contents
- Scarcity in bitcoin
- Distribution of value
- Utility of bitcoin
- Bitcoin mining
- Bitcoin mining rewards
- Is bitcoin mining still beneficial?
- Bitcoin mining difficulties
- Shifting rewards
Scarcity in bitcoin
The key to maintaining the value of a currency is its supply. Excessive supply of money can lead to an increase in the price of goods, which can lead to economic catastrophe. Too little money can lead to financial problems. Monetarism is an economic concept that aims to address the role of money supply in the health and growth of the economy.
In the case of fiat currencies, most governments around the world keep printing money to overcome the shortage. Many governments devalue the fiat currency as a precautionary measure against inflation. In the United States, for example, the rate is historically close to 2.4.
This is different from a bitcoin, which has a flexible issuance rate that changes over time.
Distribution of value
In order for a single currency system to function as a medium for exchanging all kinds of goods and values within the economy. It must have flexibility with the distribution. Currency should be distributed to accurately reflect the value of everything available in the economy or service.
Utility of bitcoin
A bitcoin must be useful for it to be useful. Individuals must be able to have reliable bitcoin trading units for goods and services. This is one of the main reasons why bitcoins developed in the first place. So these market participants will not have to trade directly for commodities. Heavy precious metals and commodities do not easily meet this need.