Writing about Bitcoin’s future is a fool’s errand, so here goes: The cryptocurrency’s long-term value is dependent on whether it becomes a regular, widely-used medium of exchange. That’s why Bitcoin enthusiasts should temper their confidence in their predictive abilities following Stripe’s announcement Tuesday that it would stop accepting transactions denominated in Bitcoins.
In 2014, the multibillion payment processing firm became “the first major payments company to support Bitcoin payments.” But since then, Stripe said, Bitcoin’s transaction fees and confirmation times have risen dramatically, making it far less practical than the dollar as a medium of exchange. Since December 1, Bitcoin’s transaction fees have ranged from $6 to $55.
Transaction confirmation times have skyrocketed, too. “People bet on bitcoin because it may develop into a full-fledged currency,” wrote economist Francois Velde in a 2013 essay for the Federal Reserve Bank of Chicago.
But Bitcoin is not, like precious metals, a store of value. And it is not, like dollars, guaranteed by the state.
It is a currency whose strength lies in its “blockchain” structure — which precludes the need for an intermediary to process every transaction — and its apparent limited supply, which means a central bank can’t print away its value. But Bitcoin’s underlying technology doesn’t change the fact that, as UCLA economist Lee Ohanian told me, “the parties in the transaction have to buy into the idea that Bitcoin has value, so that the seller in the transaction is confident that they can turn around and use Bitcoin as a buyer in the future.” “From this standpoint,” Ohanian said, “Bitcoin is like fiat money. Read more from dailywire.com…
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