Is Bitcoin A Legal Tender?

Bitcoin is a form of electronic money. That means it only exists in digital tokens. You can pay another person directly using Bitcoin without involving a third party like a bank. However, Bitcoin lacks an intrinsic or legislated value. What individuals are willing to pay for Bitcoin is what it is worth. And this differentiates Bitcoin from national currencies that partly get value from their legislation as legal tenders.

Nevertheless, Bitcoin is among the virtual currencies that have increased cryptocurrency market activities significantly. Over the years, Bitcoin price has increased with more people purchasing it on platforms like british-bitcoinprofit.com. Also called crypto exchanges, these platforms enable individuals and organizations to buy and sell Bitcoin.

Digital currencies fascinate most people because they are more speculative. Thus, most individuals purchase and sell Bitcoin to make profits rather than use it as a unique and new payment system. What’s more, Bitcoin price has exhibited a high volatility level. For instance, this virtual currency’s value increased from $1,000 in early 2017 to $20,000 towards the end of the same year. Then, however, this digital currency’s value dropped to $7,000 at the beginning of 2018.

Bitcoin’s extraordinary interest has also led to an increased amount of the computing power that miners need to solve complex mathematical problems that the cryptocurrency system uses to prevent corruption. However, some industry experts are skeptical whether Bitcoin will replace national currencies or the traditional payment system.

How Bitcoin Compares to Fiat Money

Many people wonder whether it’s right to define Bitcoin as money. Some people argue that Bitcoin is not money, while others say it should become a legal tender. Here’s how Bitcoin compares to conventional money.

• Payment method: Can people use Bitcoin to purchase or sell things? Fiat money is generally in the form of a national currency. Also, most people accept it as a payment method. Today, some people use Bitcoin to sell and purchase things. However, its acceptance as a payment method is still low. The fraction of the people holding Bitcoin that regularly use it to pay for services and goods is still tiny. What’s more, some experts argue that the Bitcoin system might lack the ability to cope with large transaction volumes.
• Unit of account: Do people use Bitcoin to measure services and goods’ value? In most places, people estimate the value of services and goods using the national currency. But, with the increasing acceptance and adoption of this virtual currency, it’s gradually becoming a unit of account. Nevertheless, not all businesses accept Bitcoin as a primary measure of value.
• Value storage: How long can Bitcoin maintain its purchasing power? Simply put, can Bitcoin maintain its ability to pay for the same amount of services and goods over time? Large Bitcoin price fluctuations minimize its ability to serve as a value storage.

These properties determine whether Bitcoin can serve as a payment method. Currently, some businesses accept this virtual currency as a payment means because it displays some of the primary characteristics of fiat money. However, its acceptance and adoption are still limited.

Final Thoughts

Satoshi Nakamoto designed Bitcoin to serve as a currency. Currently, some merchants accept Bitcoin as a payment method. However, it’s yet to fulfill its central functions as money. What’s more, many countries are yet to make Bitcoin a legal tender. Recently, El Salvador adopted Bitcoin as its legal tender. And this is the first country where people can use Bitcoin as a legal tender, and experts predict the continuation of this trend as the adoption and acceptance of this virtual currency increases.

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