Exactly. Problem is Bitcoin was meant to be a currency. But it still cannot feasibly be a currency, so in practice people see it as an investment vehicle, which it's not supposed to be
A bitcoin is a bitcoin is a bitcoin. People aren't concerned about whether or not a dollar is still a dollar. They are concerned about whether a dollar (more specifically their savings) can still buy the same amount of goods and services.
Bitcoin has no currency. I can't pay taxes with it, I can't buy groceries with it. It's an asset at best. A wallet has a claim on a number stored in distributed database. No more no less.
Combined with the low transaction rate I would assume people don't care about Bitcoin as currency -- only as a rapidly appreciating asset. As long as the price keeps skyrocketing why would you ever spend any unless you had no other currency?
This. People keep thinking that bitcoin is a currency. It's not. It's best thought of as a commodity, in the same way that all foreign currencies are essentially commodities, and using them to pay for things is bartering and capital gains laws apply.
In analyzing this, it doesn't matter what something purports to be, it matters what it is actually used as. By and large bitcoin is a digital commodity, not a currency. That may well change in the future, but that's not relevant to the analysis.
I largely agree. It's specifically because Bitcoin is perceived to be a place to hide capital from inflation - and the world is comically flooded with capital right now, chasing anything and everything - while all the central banks are busy vaporizing their garbage fiat. Bitcoin is not a currency. It's bizarre that people keep calling it that, years after it became obvious that it's not. If it were a currency, Bitcoin would collapse rapidly toward zero, because it's wildly impractical as a currency.
The Forbes list of world billionaires features 2755 names. They gained $5 trillion in wealth over the past year. Bitcoin is a trivial toy next to the wealth in the world today. A fun little token play thing, a place to hedge a couple of bucks, it goes in the basket.
The discussion is not about people randomly buying things higglety-pigglety. The specific point is "Doesn’t this completely undercut the idea of bitcoin as currency?" It does.
Currencies are well-studied economic entities. So are investments. They have different purposes, and people behave differently with respect to them. You can feign ignorance of the two all you like, but that does not erase the difference.
> Nobody says "I'm only getting a appetizer because if I invest the money instead this $20 will be worth more next week."
People in fact do that all the time. People spend less so they can invest more. They trade currency for an asset whose value they expect to appreciate. If that asset does indeed appreciate, they are far more likely to hold onto it than cash, especially if they expect to it to appreciate yet more.
I gave you a specific example of a prominent investor and Bitcoin advocate shifting from treating Bitcoin as a currency to treating it as an investment. Which you ignored, just like you're ignoring basics facts about finance.
I agree, except for the part where you say bitcoin is currency.
Most people will not accept bitcoin as a medium of exchange. I cannot go to my local grocery store and buy something with bitcoin. I can, however by something with dollars. Thus bitcoin is not yet a currency.
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