Bitcoin as a Currency?
Recent speculation relating to the possible acceptance of Bitcoin by Amazon led to another flurry of volatility for cryptocurrencies. Investors might want to take a deep breath, step back, and consider if this makes sense, is even feasible, much less practical.
Amazon has stated that the company has no immediate plan to accept Bitcoin for payments. At the practical level, how many Amazon customers have a Bitcoin account (wallet)? Are Amazon customers going to buy Bitcoin so that they can buy merchandise from Amazon using Bitcoin? No, they’re going to use their credit card, like everyone else.
It is probably safe to say that use of Bitcoin as a general use currency will not happen until people start receiving Bitcoin denominated income. Without a stream of Bitcoin coming in, such as from wages or investment income, it is not going to be feasible to use Bitcoin for general purchases. See our blog of 02 Jul 2021 “Earning the Same Currency You are Spending”.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA®