Business, 25.12.2019 02:31 heybro12

Bitcoins as store of value. bitcoins are a new form of electronic, privately issued money that can potentially preserve the anonymity of transactions. the prices of a single bitcoin has varied between $400 and $1,200 in recent years. from the point of view of money as a store of value, bitcoins are a. no store of value since they cannot be used for all purchases. b.a poor store of value because their prices fluctuate too much. c.a poor store of value because their interest earning capacity is low. d. a good store of value because their prices don't fluctuate too much.

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Answer from: whitakers87

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B.a poor store of value because their prices fluctuate too much

It is not a good store of value because it has little to no utility, other than acting as a medium of exchange. Its value currently depends on the whims of the people that use it and could evaporate at any time. The volatility makes it a poor unit of account.

To be successful,any form of money must be both a medium of exchange and a reasonably stable store of value. And it remains completely unclear why BitCoin should be a stable store of value. The rapid changes in Bitcoin’s price reflect the confusion and self-doubt in the minds of real people trading it. Volatility is measured in traditional markets by the Volatility Index. Volatility in Bitcoin does not yet have a generally accepted index since cryptocurrency as an asset class is still in its nascent stages.Price fluctuations in the Bitcoin spot rate on the Bitcoin exchanges is driven by many factors.Here are just a few of the many factors behind Bitcoin's volatility:

1. Rate of adoption is hampered by bad press: News events that scare Bitcoin users include geopolitical events and statements by governments that Bitcoin is likely to be regulated. Bitcoin's early adopters included several mal actors, producing headline news stories that produced fear in investors.

2. Bitcoin's perceived value fluctuates: One reason why Bitcoin may fluctuate against fiat currencies is the perceived store of value versus the fiat currency. Bitcoin has properties that make it similar to gold. It is governed by a design decision by the developers of the core technology to limit its production to a fixed amount, 21 million BTC

3. Too much variance in perceptions of Bitcoin's store of value and method of value: Bitcoin volatility is also driven in large part by varying perceptions of the intrinsic value of the cryptocurrency as a store of value and method of value transfer.

4.News about security breaches make investors react: Bitcoin can also become volatile when the Bitcoin community exposes security vulnerabilities in an effort to produce massive open source responses in the form of security fixes. This approach to security is paradoxically one that produces great outcomes.

Because of this volatlity, it's a poor store of value. However, as the adoption grows, Bitcoin will be less and less easy to move and manipulate, it will be less volatile and store of value characteristics will be more attractive.

Answer from: Quest

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Answer from: Quest

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