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.
Do you agree with this research result?
This caught my attention. I don't agree with the following reason why people should not invest in bitcoin as store of value. What has security or trust issue has something to do with it?
Let say, if one currency is inflationary and another currency is deflationary in nature, which do you think the general population rather store or save over the long term? Obviously, people will side with the one that rises in value over time, which is bitcoin.
Instead, digital currency may be used as a medium of exchange dominantly.
Yes, definitely. With Bitcoin, its possible to pay for goods and services instantly by transferring the digital money straight from your wallet to someone elses digital wallet. Easy as that.