International Monetary Fund inquires: Is bitcoin real money?
Bitcoin prophets are not the only ones celebrating a boom. The crypto boom is also prompting sceptics who are already painting the crash on the wall. The International Monetary Fund is getting to the heart of the Twitter community and asking the question of all questions: Are cryptocurrencies real money?
Play money, risk assets, fake currencies: There is no shortage of stigmas in the crypto space. Since Bitcoin first saw the light of day in the digital world, critical Crypto Trader voices have accompanied the cryptocurrency, working off the same prejudices. The risk and volatility are too high, the practical benefits too low. Especially since Bitcoin and Co. are only used for illegal transactions in the darknet anyway.
This or something similar is the most prominent killer argument. But the picture is gradually changing. Public perception has become more sensitive to the crypto issue in recent years. Digital currencies may still be misunderstood by a broad public. But the crypto market has opened up an ever-growing investor base. Gaps in knowledge have been filled and many prejudices have been dispelled.
The question of all questions
But although crypto assets are celebrating their triumph as an asset class in the traditional financial markets as well, one question remains: Do cryptocurrencies fulfil the function of a means of payment? The International Monetary Fund (IMF) has taken up the question and launched a poll on Twitter.
The preliminary result: 80 percent say „yes, digital currencies are real money“, only 20 percent voted against. At the time of going to press, almost 88,000 users had already taken part in the poll. The result can therefore be considered quite representative, even if the platform probably attracts far more crypto-savvy supporters than critics.
The vote has set off a lively debate. In the commentary lines, a largely factual exchange has erupted between pro and con representatives, capturing a general mood.
The spectrum ranges from arguments that praise Bitcoin as the best money ever to negative attitudes that compare the crypto market to a Ponzi scheme. One user named Panos argues that cryptocurrencies are not just money, but the 2.0 version of money. They are more efficient, more democratic and more decentralised than fiat currencies.
The user R. J. Miller disagrees: Bitcoin is too sluggish, too expensive and has a scaling deficit when it comes to using the currency for money functions. Bitcoin is a good store of value, but not a currency in the sense of a quickly exchangeable and stable means of payment.
The Bitcoin dilemma
These two opposing poles show the real dilemma of Bitcoin and Co. because both users are right. Compared to fiat currencies, cryptocurrencies have the advantages of decentralised money systems that are resistant to manipulation and enable anonymous money flows and financial inclusion. But it is also an open secret that Bitcoin has not yet been able to establish itself as a recognised means of payment for various reasons. Crypto acceptance points are still scarce, at least in European latitudes.
So the question should rather be: Can cryptocurrencies, especially the largest of them, Bitcoin, be both a currency and a store of value? Is this an apparent contradiction or is the balancing act actually impossible?
Only time can provide a conclusive answer. Despite its gigantic value development, Bitcoin is still learning to walk. The Bitcoin whitepaper has just 12 years under its belt. Considering the short time frame it took for the currency to get to where it is today, and in which an entire crypto ecosystem with exchanges, wallet providers and brokers has formed, the chances are that Bitcoin and co. will continue to find their way to the cash register with increasing frequency.