I don’t understand how Bitcoin works as a currency

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I don’t understand how Bitcoin works as a currency

I’m sure this has been asked before, but I’m curious about this:

With most currencies, their value decreases over time (inflation). For instance, the USD is worth less and less every year. This encourages spending, since it’s better to use the money you have, rather than keep it and watch it’s value go down every year.

If USD was worth more each year, that is deflation, typically seen as an economic killer, since people hoard their money rather than spend it.

However, it seems that for most people, they want to see the value of Bitcoin (and other cryptocurrencies) increase each year, and in fact, they do hoard it. Doesn’t this make it worthless as a currency? If it’s not useful as a currency, what value does it have?

I don’t understand how it can be an investment and a useful currency at the same time, what am I missing?

Sashitha ilepperuma Answered question May 30, 2022
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It doesn’t. currently it’s just like any other asset. most people buy and hold onto it in the hope that in the future they may sell it for profit.

Enterprise adoption as a payment method is rising. but as of now people just see it as investment.

Sashitha ilepperuma Answered question May 30, 2022
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It doesn’t work as a currency, it’s function is more similar to gold than to a dollar

Joan Husk Posted new comment May 30, 2022

It’s not gold.

Cant send gold around the world with a click of a button.

The key is that there is a limited amount of Bitcoin (21 million). There cannot and will not be more than that number. So like gold, it has that rarity aspect, and can be seen as a finite ressource, unlike USD that can be printed “freely” by those who regulate it.

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The only thing inflation does is make us overproduce useless things. Humans produce so much useless crap only because they need to spent money on something so it does not decrease in value, its insane. And on the other side, consumers spent all their money on shit they dont need for the exact same reason. This slowly shifts all of the money from the poor to the rich.

Kevin Sung Answered question May 30, 2022
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