The last problem is that currencies should be a trustworthy store of value. But as of now, putting money into any cryptocurrency is a gamble. The price could move up or down 10% within a single. If I had $100 in 2008, it would be worth about $85 today due to the effects of inflation slowly eating away at the purchasing power of the dollar.
But at least it’s a slow and somewhat predictable decay over a long period of time. You can assume what will happen to the value of your money if you hold it for 5 years. But there is no way to tell what bitcoin’s value will be 5 years from now. Cryptocurrencies have no assurances.
This is why everyone still values goods and services with dollars, and not bitcoins. If an appliance store advertises a dishwasher for 0.25BTC nobody would understand how that’s valued. Its perceived value could change a lot from one day to the next because of how volatile BTC is.
But if the dishwasher has a price tag of $2,500 then everyone would know exactly how much that’s worth. Maybe Bitcoin will become a currency someday, but right now none of the cryptocurrencies can be taken seriously as currencies. They are simply financial assets that only exist in digital form.
The following article was republished with permission from Modest Money.