Bitcoin’s Value Debate: Store of Value vs. Medium of Exchange

Bitcoin’s Evolving Role: Store of Value, Medium of Exchange, or Both?

  • Debate continues over Bitcoin’s primary use as either a store of value or a medium of exchange.
  • Recent years show rising attention to Bitcoin’s role in holding value, similar to Gold.
  • Industry leaders highlight benefits for both everyday payments and institutional asset storage.
  • Some experts see potential for both uses to develop together, not in competition.
  • Integration of Bitcoin with Artificial Intelligence is seen as the next major development.

Bitcoin remains at the center of an ongoing debate about whether it works best as a store of value or as a medium of exchange. At recent industry events, prominent voices have offered different arguments about the cryptocurrency’s main purpose and future direction.

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Over the past four years, the narrative around Bitcoin has shifted more toward its role as a store of value, similar to digital gold. References connecting Bitcoin to digital gold, like Bitgold, and discussions about miners supporting the network underline this view. At a February Presidio Bitcoin launch event, Jack Dorsey and Michael Saylor publicly discussed the topic.

Dorsey argued in favor of Bitcoin’s utility for day-to-day payments, especially in developing regions where relying on third-party payment processors like VISA and Mastercard can be costly and limit financial freedom. He stated, “Bitcoin’s high value over time will come from its utility, which is a medium of exchange.” However, he acknowledged that widespread use for payments will require further development.

Michael Saylor made the case for Bitcoin as a store of value. Saylor emphasized that most global wealth is not used for spending but for saving and investing. He said Bitcoin needs to compete with established asset classes like stocks, bonds, and real estate. According to Saylor, Bitcoin could act as a reserve asset and settlement platform for large institutions, similarly to how gold underpins international finance.

According to the source, both viewpoints are possible and not necessarily at odds. The author notes that industry efforts may shift between these use cases, but in the long run, each supports the growth of the other. As more people rely on Bitcoin for investment, it could encourage its use as a payment method, and vice versa.

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The article also mentions ongoing efforts to connect Bitcoin technology with artificial intelligence (AI). Recent advancements include AI agents performing transactions through tools like the Lightning Network and exploring complex transactions using Taproot, a recent upgrade to Bitcoin that allows for more private and flexible transactions. AI could also develop new ways to secure Bitcoin and provide innovative tools for financial institutions.

As Bitcoin continues to evolve, the conversation around its primary use may change, especially as new technologies and user needs arise. Observers suggest that if both store of value and payment uses succeed, Bitcoin could eventually serve as a global unit of account.

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