Is Bitcoin (BTC) a currency? Sweden’s central bank weighs in the largest crypto asset
Sveriges Riksbank, Sveriges centralbank, looks at Bitcoin in an attempt to determine whether the largest cryptocurrency can be considered a currency.
According to the Riksbank, Bitcoin must meet three criteria to be considered a currency: value stock, means of payment and unit of account.
The central bank says that Bitcoin is not a reliable store of value due to its volatile nature.
“If an asset functions as a value preserver, you should be able to trust that it is possible to buy about the same amount for, for example, SEK 100 today as tomorrow. The price of Bitcoin has had a high degree of volatility and is therefore a relatively poor preserver. ”
The Riksbank says that although BTC is accepted as a means of payment in a small number of places, BTC is not at all as accepted as a credit card.
“If the asset acts as a means of payment, a buyer must be able to use the asset to pay and a seller accepts it as payment. There is no exact figure on how many companies accept Bitcoin as a means of payment.
But Coinmap has a map service of various merchants that accept Bitcoin and ATMs where you can buy Bitcoins. On May 13, 2022, there were approximately 29,500 merchants and vending machines on the map. As a comparison, Visa cards are accepted by more than 60 million merchants. ”
The central bank also claims that Bitcoin does not function as a calculation unit due to its ever-changing prices.
“If the asset acts as a unit of account, it can be used to price goods and services. The two functions above come into play, as it is more difficult to price something if the value of the asset fluctuates a lot or if it is not used as a means of payment. “
Since Bitcoin does not meet the three criteria for money, the Riksbank says that it only considers BTC as an asset, but not as a currency.
“Bitcoin generally does not fulfill the three functions and is thus not money, at least not in the sense that it functions as money in the traditional financial system and in society. Similar reasoning can be applied to many other cryptocurrencies. “
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Selected image: Shutterstock / Mia Stendal