The 22nd of May is now known as the Bitcoin Pizza Day in the community as it marks arguably the most famous Bitcoin transaction ever. A person in Florida, called Laszlo Hanyecz, paid 10,000 bitcoins for 2 large pizzas on that day. With the Bitcoin price of just over $10,000 today, this purchase appears to be outrageous.
However, the notorious transaction might actually prove to be a positive example of Bitcoin being used as a currency for payments, while the argument whether or not Bitcoin should be used for a store of value or for payments continues to rally.
Bitcoin As a Store of Value
Bitcoin’s price has been relatively stable in the last few weeks, whereas 2019 turns out to be quite bullish. When compared with 2010 though, the value in USD that Bitcoin provides is immeasurably higher – 10,000 Bitcoins were worth $41 9 years ago and now simple math shows that the same amount of bitcoins is north of $10 million.
When the 9-year price increase is put in perspective, the logical outcome might be that Bitcoin is best served as a store of value, instead of a payment method. Weighted in on the matter was even the chairman of the US Federal Reserve, Jerome Powell, stating that “Really, almost no one uses Bitcoin for payments. They use it more as an alternative to gold, really. It’s a store of value, it’s a speculative store of value, like gold. “
Bitcoin as a Payment Method
No matter the physical distance between the two participants in a Bitcoin transaction, it’s almost instant and with substantially lower fees than regular ones. It’s a secure and decentralized peer-to-peer payment system.
However, the main opposition for the utilization of Bitcoin as a payment resource has always been the extreme volatility which was seen a few years back. More recently though, Bitcoin’s price movements of over 20% per day have disappeared, which is good news for utilization and, thus Bitcoin as a payment system might see a positive reaction. The argument stands that in order for Bitcoin to receive mass-adoption, it has to be used regularly as an actual payment method.
Ultimately, Bitcoin can be used for both. As a store of value, it has delivered incredible returns over the last decade and, even more so, it has shown its negative correlation to traditional markets, hence the argument for it being a hedge. As a payment method, volatility movements have decreased significantly over the last year. Mass-adoption signs are coming from several sources, including a comprehensive educational tutorial on Bitcoin from Bank of China and media adoption from CNBC, replacing the CAD tracker with BTC on their website.
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