Sweden’s central bank, Sveriges Riksbank, is examining Bitcoin to determine whether its largest crypto asset can be considered a currency.
According to Riksbank, Bitcoin must meet three criteria to be considered a currency: store of value, means of payment, and per account.
central bank say Bitcoin is not a reliable store of value because of its volatility.
“If an asset serves as a preserve of value, you must be able to trust that you can buy it today for the amount of 100 Swedish kronor today, for example tomorrow. Bitcoin price has a high level of volatility and is relatively poorly preserved.”
Riksbank says BTC isn’t as widely accepted as a credit card, despite being accepted as a payment method in a few places.
“If an asset serves as a means of payment, the buyer must be able to use the asset to pay, and the seller must accept it as payment. There are no exact figures on how many companies accept Bitcoin as a means of payment.
However, Coinmap has a map service for various traders that accept Bitcoin, as well as ATMs where you can buy Bitcoin. On May 13, 2022, the map had about 29,500 merchants and vending machines. By comparison, Visa cards are used by more than 60 million merchants.”
The central bank also argues that Bitcoin is not used on a per-account basis because of its ever-changing prices.
“When an asset functions on an account-by-account basis, it can be used to price goods and services. The above two functions work because an asset’s value fluctuates a lot or is more difficult to put a price on if it is not used as a means of payment.”
Because Bitcoin doesn’t meet the three criteria for money, Riksbank says it only considers BTC as an asset, not a currency.
“Bitcoin is not a currency, at least in the sense that it functions as money in the traditional financial system and society, as it generally does not perform three functions. Similar reasoning can be applied to many other cryptocurrencies.”
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