Bitcoin is the first successful cryptocurrency. Thus, it has the first-mover advantage. Its first-mover advantage is the advantage that is has as money. At this time, no cryptocurrency other than Bitcoin is thought of as money.
Three primary roles of money
The task of money is to be:
- a store of value
- a medium of exchange
- a unit of account.
Store of value
To be a store of value, Bitcoin must be easy to save, store, and retrieve. All would agree that Bitcoin has these properties. Just ask one of the millions of people who own some Bitcoin.
Medium of exchange
For Bitcoin to be a medium of exchange, it must easy to do financial transactions. And most people will think of Bitcoin as equivalent to a fiat currency to do a financial transaction. But Bitcoin has a more important role as a medium of exchange. Bitcoin is the primary cryptocurrency used to get other cryptocurrencies and/or tokens. Most of these exchanges cannot be done with fiat currencies other cryptocurrencies.
Unit of account
For Bitcoin to be unit of account, it must be able to be divided into smaller units without loss of value. The smallest unit of Bitcoin is a Satoshi. There are 100 million Satoshis in 1 Bitcoin. This property of Bitcoin makes it easy to use Bitcoin as a medium of exchange to get other cryptocurrencies and/or tokens.
Bitcoin is here to stay
Bitcoin has a first-mover advantage as a cryptocurrency. This advantage has made Bitcoin the world’s reserve cryptocurrency. As the world’s reserve cryptocurrency, Bitcoin is the best selection to be:
- a store of value
- a medium of exchange
- a unit of account
At this time, Bitcoin is here to stay.
