Bitcoin Is Money That Works '24/7/365', Unlike the Banking System, Analyst Argues

  • ADVFN.com investment website CEO Clem Chambers explains why bitcoin is money.
  • He noted that bitcoin and other cryptos are an effective medium-of-exchange, store-of-wealth, and unit of account.

Clem Chambers, the CEO of ADVFN.com, a website dedicated to private investors, recently published a blog post in which he argued that bitcoin (BTC), the flagship cryptocurrency, is actually real money.

Despite claims that bitcoin is not money, Chambers revealed in his post on Forbes that he has “made a lot of money out of crypto” and that he “can tell you categorically that” bitcoin has all the essential properties, or characteristics, of money. Traditional economists define money to be a effective medium-of-exchange (MoE), a store-of-value (SoV), and a unit account. According to Chambers, bitcoin meets all three criteria for money, in addition to “other things.”

Bitcoin Is "An Excellent Means Of Exchange"

Going on to argue that bitcoin is “an excellent means of exchange”, Chambers pointed out that users “can’t reverse a BTC payment like a payment by credit card.” This is a useful feature for merchants as bitcoin and other cryptocurrencies bring finality to transactions. Notably, Chambers mentioned “there is now a hard core of people who buy things with credit cards and ‘charge back’ months later.” These people claim that they were either not satisfied with the product or service, or even assert that they did not conduct the disputed transaction. This is often unfair to merchants as they’ve already provided their service, but will ultimately not be compensated.

However, these types of problems, or issues, won’t arise when using bitcoin, as Chamber wrote: 

You can’t do this with bitcoin. You can’t bounce a bitcoin or charge back a bitcoin. You can’t forge a bitcoin. You can’t receive it and claim you didn’t.

"No Multi-Day Banking Delays" With Crypto

Citing other advantages bitcoin and other cryptocurrency payment platforms have over traditional transaction systems, Chambers noted that “BTC arrives in minutes from distant clients” and it’s easy to confirm that the transaction, or payment, has been sent. For cross-border transfers, there are “no multi-day banking delays for payments that may or may not have been sent”, Chambers wrote. He added that users receive “an irreversible notice” their bitcoin payment has been sent out to their address.

In addition to receiving quick and conflict-free payments, Chambers noted there are services available now that allow users to “convert [their] crypto into pounds or dollars with no outrageous currency conversion” rates. Chambers also revealed that a BTC payment “worked for a US Florida client of [theirs]” - even during an emergency situation due to a “recent hurricane while the US bank was evacuated.”

While business-to-business (B2B) transactions involving fiat currencies can only occur during business hours, Chambers mentioned: 

Bitcoin is 24/7/365, the banking system is not. The blockchain works weekends, holidays and evenings, like our international sales staff and our websites.

Bitcoin Is A Store Of Value, & Unit Of Account

Bitcoin is also a SoV, and it’s “ridiculous to point out” that the flagship cryptocurrency was valued at $20,000 over a year ago and it is now trading for only $3,600 - Chambers argued. That’s because “one-yen used to be a gold coin” and if “you look at the history of money and its never-ending narrative of inflation and obsolescence”, then you are able to gain a better perspective, Chambers wrote.

Per the ADVFN.com CEO, “you can [also] use bitcoin as a unit of account.” He pointed out that hundreds of crypto exchanges are using cryptocurrencies as a unit of account and that blockchain-based cryptos are “by definition” associated with a ‘ledger’ - while tokens are “by design encapsulated on a ledger.” He remarked:

To say a bitcoin is not a unit of account is to say an abacus is not a calculating machine.

How Bakkt Can Bring the Crypto Space an Institutional Investor Influx

Cryptocurrency enthusiasts have for years been waiting for institutional investors to enter the space. While the introduction of bitcoin futures contracts on regulated exchanges in late 2017 didn’t gain a lot of traction, but Bakkt may.

Bakkt is a long-awaited bitcoin futures exchange and on-boarding platform from the Intercontinental Exchange (ICE) - the parent company of the New York Stock Exchange – and it’s set to launch this year. Bakkt itself has remained tight-lipped over the precise launch date after delaying its launch last year, with ICE CEO Jeff Sprecher in February simply saying “later this year.”

It’s possible that this quarter may see the launch or at least more news about when the exchange is finally coming. At the end of March, Bakkt CEO Kelly Loeffler explained:

While we’re not yet able to provide a launch date, we’re making solid progress in bringing the first physical delivery price discovery contracts for bitcoin to the U.S.

Bakkt’s launch could be a major milestone for the cryptoasset industry. A venture backed by Microsoft and Starbucks, its institutional pedigree alone will switch many cautious investors on. Specifically, the firm is set to help consumers pay for goods and services with cryptocurrencies, with Starbucks being the flagship retailer in its arsenal.

Bakkt’s Bitcoin futures contracts will be the first physically-settled derivatives on a regulated trading platform. This means investors will receive the contract’s underlying asset, bitcoin, when it expires.

Currently the Chicago Mercantile Exchange (CME) offers cash-settled bitcoin futures contracts, meaning investors get the equivalent of BTC’s value in fiat when the contracts expire. This is seen by some as a major development in the cryptocurrency space, as it shows traditional finance is willing to interact with the nascent cryptoasset industry.

It’s worth noting that earlier this year the ICE’s CEO called Bakkt a “bit of a moonshot bet,”  as it was organized in a way “very different than the way ICE typically does business.” The firm has its own offices and management team, and could undergo more rounds of financing in the future.

Bakkt And a Potential Bitcoin ETF

What’s significant about Bakkt’s launch beyond this, is that it may bolster the chances of a Bitcoin Exchange-Traded fund (ETF) being approved. Such a product would make it easier for institutional investors to gain exposure to cryptocurrencies.

In August, the US Securities and Exchange Commission (SEC) rejected nine other ETF applications, in particular highlighting how those applying hadn’t provided evidence that “bitcoin futures markets are of significant size’” for an ETF to be launched.

Once Bakkt is launched its trading volumes may very well help quell the SEC’s concerns over the bitcoin futures markets’ small size as institutions and other investors may feel comfortable entering it. Larger futures contracts trading volume, increased liquidity and a well-established company involved may prove enough to convince the SEC that the time is right for a Bitcoin ETF.

Bakkt therefore represents a very significant milestone for a maturing cryptoasset industry and may well herald the “institutional influx” that many have been anticipating since 2017. Despite the markets remaining relatively flat throughout 2019 these looming decisions in the U.S. have the power to move the entire industry forward, for better or worse.