Bitcoins Are Money ?

By Othman Darwish

Money is the way we get things we need and want. In this simple context  Bitcoins represents money that people  uses  to buy and sell goods and services as it address  some of the money functions, such as: medium  of exchange, store of value ...etc. It also achieves many of money qualities such as: durability, being fungible , divisibility ..etc. Many people describe Bitcoin  as the "Money of Internet" , or the inevitable evolution of today  form of money. In other words, Bitcoin is  simply  Money .

Technically,  Bitcoin is a new  kind of money and innovative payments network , it is a form of  digital currency, issued and held electronically , and protected by cryptography. Unlike traditional  fiat-currencies or government-issued money, Bitcoin is not controlled or issued by any government agency,  instead, people and business can produces Bitcoin using computer resources and  by solving mathematical problems.       

When money is used in  the exchanges of goods and services, it is performing a function as a medium of exchange, Bitcoin does  excellent  function as medium of exchange as Bitcoin payment  network allow    consumers and merchants  to quickly move holdings  around anywhere in the world without the need for intermediaries banks  or  central clearing houses. Transactions verification is done by special nodes in the network that  act as  validators or "minner". Also,  transactions fees are low and basically rely on transactions size (number of bytes), fees are not related to the transaction  amount anymore. Bitcoin networks are built in a decentralize manner, where no government or authorized entity can control it. Asset transfer between  buyer and seller is done in peer-to-peer manner without the need for intermediaries, this encourages the use of Bitcoin, not just due to low amount of fees, but more important due to the fact the 80-85 % of world population are unbanked users or does not have access to efficient banks that  facilitate their daily life transactions exchanges. One can join the Bitcoin  network easily by using a mobile phone connected  to the internet , and accordingly, start buying or selling immediately .

 Many economics and central banks researchers argue that Bitcoin is not money as it is not function as store of value, at the same time they can't decline every year inflation and loss of value of the current fiat currencies. At  this point in time, the new innovation of new money such as Bitcoin volatility is reasonable. The fundamental function of money is the ability to store of value, but again, what's meant by  the value? The value is not a physical thing that is disconnected from society, instead, the value is always  linked with what people want; thus, what's of value today may face a dramatic drop in its value in the future. Let's take the Gold as store of value, what will happen if NASA after the discovery of MARS returned back  with a mountain of Gold?  or a chemical scientist could manufacture it in the lap? In conclusion, money is social institution, people expectation and want gives it a value.

The digital currency  formed  by Bitcoin  is normal  evolving of money  in the era of information technology, and like any new innovation and technology, a transition phases are in need, especially if it impacted the entire globe .The usage of Bitcoin is increased rapidly all over the world by  businesses and  individual people to buy and sell goods and  services which emphasis that Bitcoin is a Money .