Sveriges Riksbank (“Riksbank” for short), which is Sweden’s central bank, took to Twitter to debate whether Bitcoin constitutes currency.
In a series of tweets posted on the Riksbank’s official Twitter account, Bitcoin must meet three strict criteria to be considered a currency: to function as a depository (store of value), to offer a means of payment, and to be a unit of account. As the tweets continue to clarify each point, the central bank has finally concluded that Bitcoin, and other cryptos, are assets rather than currencies.
The Swedish central bank argues that Bitcoin fails as a “store of value” due to its high price volatility. According to the bank, users of a currency need to be confident that what they are about to buy will remain relatively stable over time.
The bank also disputes Bitcoin’s status as a means of payment, writing that “there is no exact figure on how many businesses accept Bitcoin”, for payment. As a proxy, the bank compares Coinmap’s list of bitcoin ATMs – around 29,500 worldwide – to Visa, which is accepted by more than 60 million merchants worldwide.
The Riksbank argues that Bitcoin also fails as a unit of account, due to its inability to function as a store of value or a means of payment. The central bank also points out that countries universally price items in their own currency, rather than Bitcoin.
The bank concludes its pitch by writing “Bitcoin generally does not perform all three functions and is therefore not money, at least not in the sense that it functions like money in the traditional financial system and in society” . The tweet also extends its reasoning to other cryptos, including Ethereum.
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The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing in or trading crypto-assets involves the risk of financial loss.
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