Currency or Asset?

In wealthy, stable countries with functioning banking systems, Bitcoin is mostly used as an asset — something you hold, like gold or property, with the expectation that it holds or increases its value over time.

In countries with unstable currencies or authoritarian financial systems, Bitcoin is used as money — for everyday transactions, for storing savings outside the banking system, for receiving payments across borders without a bank account.

In El Salvador, it’s legal tender. In Nigeria, millions use it to send and receive international payments despite the government’s attempts to restrict it. In Argentina, people convert pesos to Bitcoin the day they get paid, before inflation eats their wages.

The label matters less than the function.

What Bitcoin actually is depends on the problem it’s solving for the person using it. For a software developer in San Francisco, it might be a long-term savings vehicle. For a worker in Venezuela, it might be the only way to receive a payment from abroad. For a family in Turkey, it might be the way to store savings without watching them lose 50% of their value in a year.

The question “is it a currency or an asset?” comes from a perspective where the local currency already works well. For billions of people, it doesn’t.

Bitcoin is whatever it needs to be — for whoever needs it most.

Tomorrow: “store of value” — what this phrase actually means, and why it matters more than the price.

— The Daily Bit