Bitcoin Has 'Unquestionably' Succeeded As A 'Store of Value', Says Early Adopter Jeff Garzik

  • Bitcoin has become a legitimate store of value, according to early cryptocurrency adopter and entrepreneur, Jeff Garzik.
  • Garzik added that bitcoin has not been widely adopted as a medium of exchange, which was supposed to be one of its main use cases.

Jeff Garzik, the co-founder of Bloq, a company that develops “chain agnostic”, decentralized, enterprise-level products for various businesses, recently said bitcoin (BTC) has “unquestionably” succeeded as a store of value (SoV).

Garzik, a former Bitcoin core developer at a BTC payment processing service provider, BitPay, noted:

[The flagship cryptocurrency] hasn’t evolved in the direction of high-volume payments, which is something we thought about in the very early days: getting merchants to accept Bitcoins.

Jeff Garzick

Bitcoin Now Less Volatile Than Major Fiat Currencies

Research firm Chainalysis, has reported in August that bitcoin’s use in commerce has been declining - even though the pseudonymous cryptocurrency’s volatility index is at its lowest point since December 2016.

As covered on CryptoGlobe, bitcoin is now less volatile than the Mexican peso (MXN) and the Brazilian real (BRL). Since September 7, 2018, BTC has traded in a relatively tight range of $6,000-$7,000. This narrow range means bitcoin's top-to-bottom range is restricted to about 8%.

In order to function as a reliable medium of exchange (MoE), a currency must be stable - meaning that its value must not fluctuate wildly. On December 17, 2017, bitcoin’s price skyrocketed to its all-time high of nearly $20,000, however, its price then dropped quickly to around $13,800 by January 1, 2018.

Crypto Market Is "Stabilizing" And "Normalizing"

Bitcoin has not been experiencing these extreme price fluctuations in recent months, which should give investors more confidence in the digital currency.

Commenting on bitcoin’s relatively low volatility in the last few months, Lennon Sweeting, the head of trading at CoinSquare Capital, said: “For speculators, it poses more of a challenge to scratch out gains in bitcoin markets. But for the market, it’s a positive sign that things have begun to stabilize and normalize.”

As bitcoin’s price stabilizes, it may work more effectively as a MoE, however, the flagship cryptocurrency may be too valuable to be used for everyday purchases, according to some analysts.

As CryptoGlobe reported in late September, Vijay Boyapati, a former Google engineer and widely followed and respected bitcoin commentator on social media, has said that bitcoin is on its way to becoming a legitimate SoV.

"Huge Opportunity Cost" For Using Bitcoin As MoE

Boyapati explained that in order for a currency to function effectively, it must serve as a practical medium of exchange, a stable store of value, and a reliable unit of account. However, the senior software engineer said we must have realistic expectations.

Boyapoti remarked that it is “absurd” to think that any newly introduced asset “can go from having no value to having massive value [while also] becoming stable.” He added that bitcoin is unable to function effectively as a MoE because the “opportunity cost” for using it as such is “huge.”

In other words, if BTC is used for daily purchases, then the user will miss out on the opportunity to capitalize on the substantial appreciation in its price in the future - assuming that its value does increase with the passage of time