Bitcoin and other cryptocurrencies are quickly becoming the most popular form of money.
It is interesting to wonder how money has evolved over the years. Gold and sovereign currency have been used for millennia in order to make trade transactions easier, safer and more efficient. Nowadays we use various currencies such as the USD, GBP and EUR, but at the end of the day, when it comes down to it, all of them are just claims on something: gold for sovereign currency, and Bitcoin for cryptocurrency.
it should hold the following properties:
- Scarcity
For a currency to be valuable, it must be scarce. Bitcoin is unique in that it has a finite supply. This is important because it ensures that as demand for your bitcoins increases, so does their value. There is never going to be more than 21 million bitcoins in circulation at any given point in time, and this creates stability and safety.
- Durability
Digital currency presents an interesting attribute. Unlike other types of currencies that can change their value over time, the value of a bitcoin is always the same. This makes it perfect for storing value long-term, while not being affected by inflation or deflation.
- Fungibility
Fungibility is the concept that all goods or currencies are interchangeable. In general, this means that when two items are in the same state or condition, the shopper does not recognize significant differences between them and therefore would exchange them without noticing any difference. The factor which may put a chink in the fungibility of bitcoin is its traceability and history.
- Divisibility
The smallest unit in cryptocurrency is known as a Bit. It is equivalent to 0.000001 Bitcoin, or 0.00000001 BTC for short. The name for this unit comes from the original measurement of a boatload of wood – the “bit’ which was used in North America during the late 80s and early 90s to denote something small enough to carry on foot or by horseback.
- Portability
The bitcoin is a global, decentralized digital currency that can be sent from one person to another without any central authority. The main reason for its popularity is its ability to move value across the world almost instantaneously and for virtually no cost.
Bitcoin has been around for 13 years now, and the popularity of this digital currency has grown to prove it’s been standing the test of time. People keep coming back to bitcoin because they want to be able to securely exchange money without relying on a third party system.