You Don’t Want to Be the One Who Bought Pizza for 10,000 Bitcoins
May 22 is popularly known as Bitcoin Pizza Day, as it marks arguably the most famous Bitcoin transaction ever. A Florida man named Laszlo Hanyecz paid 10,000 bitcoins for two large pizzas on that day. With the Bitcoin price hovering at just over $10,000 today, that purchase now appears outrageous.
However, the infamous transaction might prove to be a positive example of Bitcoin being used as a currency for payments, while the debate as to whether Bitcoin should be seen as a store of value or a medium of exchange continues.
Bitcoin as a Store of Value
Bitcoin’s price has been relatively stable during the last few weeks, whereas 2019 has been quite bullish overall. Compared to 2010, Bitcoin’s USD value is exponentially higher – 10,000 bitcoins were worth $41 nine years ago, whereas the same amount of bitcoins is now worth north of $100 million.
When the nine-year price increase is considered, the logical conclusion might be that Bitcoin is best suited to be a store of value, rather than a method of payment. The chairman of the US Federal Reserve, Jerome Powell, even weighed in, stating, “Really, almost no one uses Bitcoin for payments. They use it more as an alternative to gold, really. It’s a store of value, it’s a speculative store of value, like gold.”
Bitcoin as a Medium of Exchange
No matter the physical distance between the participants in a Bitcoin transaction, the network is almost instant and relatively cheap. It’s a secure and decentralized peer-to-peer payment system.
The main drawback to utilizing Bitcoin for payments has traditionally been its extreme price volatility. More recently, though, Bitcoin’s price movements of over 20% per day have disappeared, which bodes well for adoption. Indeed, it is likely that Bitcoin will increasingly be viewed as a capable payment system.
Ultimately, Bitcoin can be used for both purposes. As a store of value, it has delivered incredible returns over the last decade and, what’s more, has exhibited a negative correlation to traditional markets, hence the argument that it is a hedge. As a method of payment, volatility has decreased significantly over the last year. Signs of mass adoption are coming from several sources, including a comprehensive educational tutorial on Bitcoin from the Bank of China and CNBC.com replacing its CAD ticker with a BTC one.
The post You Don’t Want to Be the One Who Bought Pizza for 10,000 Bitcoins appeared first on CryptoPotato.
