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Bitcoins vs Money - Essay Example

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Bitcoin is a form of digital payment system that uses encryption techniques to regulate the generation of currency units and verifying transfer of funds. The system, invented by Nakamoto Satoshi, operates independently without the establishment of a central bank. Creation and…
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Bitcoins vs Money

Bitcoin system is entirely dependent on internet platforms, which are readily available across the globe because of the technological advancement (Rotman 1). Using Bitcoin, the average income earners can easily transact beyond border transactions without incurring extra costs in physically moving to those places. This essay examines the use of Bitcoin and money as applied in the current system.
Kudlow Larry downplays the rise in use of digital currency. He cites the rapid fluctuations in prices by hundreds of dollars in the space as a key challenge that emanates from digital currency use. He outlines an example of an individual who buys an item for $500 but after the retailer processes payment, the digital currency falls to $100 in value. He resolves that both sellers and buyers make associated losses because bitcoin is not a reliable medium of exchange with dependable store of value (Kudlow 1). On the contrary, money has a store of value. Its value does not fluctuate as rapidly and frequently as in the case of digital currency. Because Bitcoin has no store of value, economists prefer the money system to digital currency.
Digital money use has no border restrictions. Making cross-border transactions is easier and simpler than in the case of money. Money system is more reliable and regular fluctuations in prices do not affect it. Digital currency use will therefore not pose a significant effect on money use. The reason for this is that money system posses superior features like security and reliability that the digital currency system lacks.
There are viewpoint that the rising use of digital currency like bitcoin transactions will not pose a significant impact countries’ economic progress. According to Gaulio, bitcoin transactions are easily traceable to their initiators hence American government, for instance, will fully advocate its use. In a state controlled digital economy, the taxation units will ... Read More
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