I have been asked this question numerous times – What Makes Bitcoin, Money? I say to them - The same things that make your money, money; are the exact same things that make bitcoin, money.
Money, according to modern economics has three functions - a medium of exchange; a unit of account; a store of value. Its main function is that it serves as a medium of exchange. That’s the reason you can stretch your hand with a coloured paper or card made out plastic in it to the guy who sells laptop and he won’t try to punch you in the face. But you can also stretch that same hand with your wrist watch in it and he still won’t try to punch you.
Understand that value is what is being exchanged not ‘money’ (lets quote that). Whatever is accepted by someone as a thing of value can be used as money. Money can be anything. So far it can serve as a medium of exchange. Money can be your gold or your wisdom. It can be your house or your dog. It can be your maize or your cap. Money is what you say money is. If it is needed or wanted, then it is money. If it is scarce and not littered everywhere, then it is money.
Now, Bitcoin as a new kind of currency may have been invented some few years ago but what it fulfills is no different to what the barter-like-method was doing many centuries ago. It is doing the same thing cowry shells were doing thousands of years ago. I was around then, so I know what I’m talking about. (where’s a wink smiley when you need one)
Anyways, why right? How come?
I decided to accept it; she decided to accept it; he decided to accept it. Many of us decided to accept it as a currency of value. Now look at what I said earlier - whatever is accepted by someone as a thing of value can be used as money. This takes us back to the old popular quote that says, “One man’s food is another’s poison”. Your wrist watch can have value to you but not necessarily to the laptop seller. Who doesn’t want to have anything to do with your ‘Roles’ wrist watch. But that doesn’t mean you can’t trade it with another laptop seller.
This article getting much… See, I can have decided to accept bitcoin as a currency of value. I can only trade it with someone or organization that have decided to accept it too. That’s what makes it ‘money’. That’s what makes anything valuable. If it is needed or wanted, it is ‘money’. C'est fini.
Quickly, the two other functions of money
For bitcoin to function as a medium of exchange, it automatically functions as a unit of account. A unit of account is something that can be used to value goods and services settle debts and make calculations. The pizza is valued and purchased using bitcoin.
Now the third - store of value is the function of an asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved. The bitcoin can be saved in your bitcoin wallet, retrieved and exchanged at a later time. By the way, Jostpay Limited is Nigeria’s First & Best Known Bitcoin Wallet Operator.
So now you can see, what makes money, money; is what makes bitcoin, money.
Thank You For Reading Through.