The Big Q: What is a Bitcoin good for?

The Big Q: What is a Bitcoin good for?

The Big Q: What is a Bitcoin good for?


There are 2 answers to that Question:

  1. Bitcoin is money, or
  2. Bitcoin is a payment system.

Then you ask, What is Money.

Well, money is metaphysical mystery to be found in modern economics.

The best way to think about it is that if Bitcoin is a payments system, it will compete with Visa (NYSE:V), or PayPal (NASDAQ:PYPL), or bank settlement, or some other system of moving money from here to there and bayond.

If it is money, it will compete with USD, EUR and JPY.

Bitcoin’s as a payment system

This may be more useful, because it would not need to dethrone other currencies, something that the governments that run those currencies will not, do not like.

Now, if you think Bitcoin is a payments system, you run into a few problems.

The 1st is that bitcoin has severe scaling problems. It is designed for transactions to take 10 mins or more to clear. And its overall architecture means it simply cannot clear many transactions, a tiny fraction of what Visa and Mastercard (NYSE:MA) handle daily worldwide.

People are already complaining about rising fees and longer wait times for payments to clear.

For Bitcoin to compete as a payment system, it has to offer the same benefits that Visa does: rapid transfers of funds, immense scale, protection against theft, and the ability to dispute charges, all at a reasonably low transaction fee.

Or, it has to be better at something than Visa is. The only area where it can really be said to better than a credit card lies in the privacy.

That being the case it is hard to see how Bitcoin-as-payment-system can justify current valuations.

To fix and adapt is unlikely and not practical. And so Bitcoin starts to look like money.

All of the above being the case, we have been recommending  GBIT our favorite crypto-coin exchange, where professional traders and civilian participants alike can trade securely on the world’s most innovative digital asset exchange.

Click here to find out more.


Stay tuned…


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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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