Why Bitcoin is Not an Asset (Why Bitcoin is an Investment)

Why is it said that Bitcoin is not an asset? Editor’s note: This article is from Orange Book (ID: chengpishu) and authorized by Odaily Planet Daily for reprint.

Bitcoin is not an asset, but a currency, right? In the past decade, we have had no fundamental understanding of it, so its concept has always been unclear. However, in the long run, I believe it should not be considered as a means of value storage, a medium of exchange, or a commodity. Why is it said that Bitcoin lacks fungibility? One aspect is that it is not created by a specific group of people. It exists because it comprises multiple forms of technology, so it is not used as security and has no practical application. If people want to invest in this digital token as a financial instrument, they need to compare it with various traditional assets, right?

For ordinary investors, they either use these “cryptocurrencies” to buy things or exchange fiat currencies for other assets. This means that you must have some legal tender and have enough time to hold onto this asset. If you want to purchase bulk commodities such as gold or silver, you can choose to deposit them in an exchange, but you cannot convert them into cash.

In order to avoid the above situations and reduce risks, most people only consider Bitcoin. In reality, although some people use Bitcoin solely for speculative purposes, it is not the case in the real world. For example, someone is willing to sell their Bitcoin and other assets at a high price, which can bring a huge return and increase their wealth. Of course, many people also attempt to achieve financial freedom through Bitcoin – for instance, you can use valuable items such as gold bars or wine to pay wages, or collect a certain amount of interest from friends and family, just like a bank. However, in fact, Bitcoin itself does not have any practical uses. It can even be said that Bitcoin is not just a virtual commodity. Bitcoin also has many issues, such as whether it has a certain liquidity and stability, and whether it can become a safe investment target. Therefore, in practice, I believe it still depends on whether there is reasonable market demand behind it and how its market structure can be accepted by the public.

On the other hand, the most important point is that due to the excessive volatility of Bitcoin and the large price fluctuations that are difficult to bear, some losses occur, including the fact that certain institutions may have to take action to avoid regulation, resulting in losses for some investors. The supply of Bitcoin is still not supported by a determined economic model. Therefore, according to recent reports on the Bitcoin market, the US Internal Revenue Service may consider Bitcoin as property rather than stocks. However, after the US government announced a crackdown on illegal financing, officials from the US Department of the Treasury once again emphasized that they are now evaluating the legal and appropriate status of Bitcoin. At the same time, as more and more countries start adopting cryptocurrency, many companies have entered the field to support the development and application of Bitcoin. “If Bitcoin eventually becomes part of the global trade settlement system,

Why Bitcoin is an Investment

According to CCN news, Bitcoin is considered as an “investment asset” to some extent. Although it does not have a fixed supply limit, it is a primary target for investors – an investment product made for future returns. Why explain it using the difference between cryptocurrencies and traditional financial markets? Because these two fields have different development roadmaps, economic models, risk adjustment mechanisms, etc. From this perspective, Bitcoin is a very suitable form of investment (an attractive means of value storage). But we can understand why Bitcoin is a great investment from several aspects.