BitCoin is the standard for the entire cryptocurrency industry. For some entities, cryptocurrencies are virtual cash or money. Though, we should admit that this new medium of exchange struck fear and confusion to the public. Now that the name is starting to get louder in the market, people are getting more aware and curious about it. However, some countries and governments still outlaw it.
While some insist that this is just another brainchild of technology and new kind of money, Manny Gonzalez thinks otherwise. He honestly voiced out his opinion why he thinks BitCoin or cryptocurrencies can’t be considered as money. At this point, let us use cryptocurrency and BitCoin interchangeably.
Gonzalez enumerates the functions of money such as a measure of value, medium of exchange and store of wealth. He then compares each to what a BitCoin does.
Cryptocurrencies have no certain price. Its measure of value is unpredictable. As a medium of exchange, it is very risky due to its anonymity. It doesn’t have a substance and no financial footprints for that matter. These coins are not directly linked to an individual. It has no identity. As for being a store of wealth, it isn’t reliable.
It is government’s duty and responsibility to take care of its investors. By doing so, it will protect the money regulations in the whole country. With the use of BitCoin, that will be hard to do. Even a Japanese cryptocurrency exchange was hacked and was stolen an amount of $660 million. The crime in cryptocurrency can be extremely high.
This cryptocurrency industry screams fraud. Gonzales insisted that BitCoin is not money and not even an asset. Money possesses scarcity. BitCoin does not. If the existence of these cryptocurrencies continues to grow, its potential supply will be uncountable in no time. Anyone can create a cryptocurrency of their own. When that happens, each cryptocurrency will equal to different commodities.
With BitCoins, there will be no government oversight and provisions. Unless, of course, they allow it.
Gonzales also said that we might make our fortune out of these cryptocurrencies, but its value could also turn to zero. He set out three probabilities that may happen in BitCoin.
First on the list is the virus. Since cryptocurrencies are computer generated, when a virus infects your app, your money is gone. BitCoin transactions are irreversible.
Second, the probability of government to outlaw it is high. Governments find it too risky.
Third, everyone is doing what everyone is doing. When one does a cryptocurrency, another one may follow. More birth of new cryptocurrencies will lose its sense of scarcity.