South Koreas central bank has published a new working paper analyzing a dual-currency regime by pitting cryptocurrencies against traditional fiat currencies. Fiat currencies have been historically known to decrease continuously, the authors confirm, due to inflation and the factor of new money pumped in to the supply by the central bank, also known as quantitative easing. Bitcoin, in stark contrast, has a fixed supply which would imply a deflationary bias, the authors note. However, security or trust issues the decentralization of digital currency and the absence of insurance provided by governmental authorities may prevent digital currency from being used as a store of value. Instead, digital currency may be used as a medium of exchange dominantly.
Do you agree with this research result?
I think it is the other way around. Cryptos, especially the leading ones like Bitcoin, will function better as a store of value because of their deflationary nature.
Right now, because of the volatility it doesn't function as a store of value. But eventually, we will get there.(Bold highlighting mine)
That's a good observation. BTC is a bit too volatile to count on as a Store of Value for now. I agree that we will get there someday though.
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My experience and reading would let me believe that South Korea's analysis of BTC prospects is pretty accurate. S Korea is a very advanced country, and they keep their word, HONOR still means something. I do business with Korea, their products are excellent quality at good prices.