Why bitcoin is not a currency.

[zorchy]

It should be becoming clear that bitcoin is not a currency, if it was a currency you would be able to price a 30 year home mortgage in it and the buyer would know what they were going to be paying and the seller would know what they were going to be getting. That is not and can not be the case with bitcoin or any of the other currently available digital assets commonly referred to by the misnomer "cryptocurrency", but why?

To explain why bitcoin is not a currency you first need to understand what currency is. Currency is the base UNIT in a system of measurement for value. The reason that bitcoin is not a currency is because it is not a unit of measure. Units of measure all have socially objective definitions and are a constant, bitcoin cannot be defined in objective terms and is therefore not capable of being a unit of measure and is therefore not currency. That reason alone would be enough to bar it from ever functioning as a currency, but we will look at a couple others as well.

The astute reader will be noting at this point that the world's reserve currency, the US dollar, is also suffering from this same condition. It has not been definable in objective terms for the last 46 years, ever since the closing of the gold window by Nixon and the end of the Bretton-woods agreement. The USD is no longer a currency, for the same reason that bitcoin is not a currency, It's not a unit of measure.

So, the question becomes why are we able to make long-term economic calculations with the dollar and not bitcoin? The answer is simply that we are operating the system off of the legacy of the gold standard. If the dollar were to be introduced in a similar manner as bitcoin without the legacy of an objective definition/standard, it too would have massive stability issues and would not be capable of pricing long-term economic projects. The fact that the dollar is not currently a currency should be concerning.

The next major reason that bitcoin is not and can not be a currency is that it has a predetermined hard limit of around 21 million. Units of measure must have an elastic supply without any arbitrary limits. There is not a hard limit to the number of inches, pounds, hours etc. and there can not be a hard limit to the unit of measure for value either. If we wanted to create all value units in advance and keep the definition a constant we would have to know all of the value man is capable of creating, in the same way that if we wanted to create all of the units for the measure of length in advance we would have to know all of the length we might need to quantify in advance, both are unknowable.

The final reason that bitcoin is not a currency is that it contains the property it is supposed to represent (value), all units of measure with the exception of the unit of measure for value have evolved to become artifact free, there is literally no there there just words on a piece of paper. Inches contain no length, pounds contain no weight, hours contain no time and currency should contain no value. Science has proven that units of measurement should not contain the properties they represent.

Which brings us to the difference between money and currency. Money is the most traded of commodities, contains socially objective value, and is used as a unit of measure, (examples would be gold, silver, salt, oil, water, paper notes). Currency is strictly a representation of value (examples would be coupons, airline miles, business to business barter credits, digital USD balances). Money is the inchworm (contains length and represents length), Currency is the inch ( a pure representation). We no longer use money in the same way that we no longer use the inchworm. In the same way inches have much greater accuracy and utility than inch worms, currency has much greater accuracy and utility than money.

In conclusion, the way to create a true digital currency is to first define it in socially objective terms, second is to remove the limits and let the unit have an elastic supply and lastly to ensure that the unit does not contain socially objective value and is solely a pure representation.

[frknbbr]

It's just a sociological and economical term. When the right time come, Bitcoin will be a real currency, as other crypto currencies.

[hinata hyuga]

if I think bitcoin will eventually become a digital currency because the value in it is very fast. In addition, maybe using digital money is more efficient