The Central Bank of Sweden, also known as Sveriges Riksbank, recently deepened in Bitcoin (BTC) to determine if the king cryptocurrency can be classified as currency. He established that he must comply with three criteria to be considered a currency: deposit of value, means of payment and account unit.
There is no reliable value reserve
The Central Bank indicated that Bitcoin is not a reliable value reserve due to its volatile nature. Said the following:
“If an asset acts as a value reserve, you must be sure that you can buy both today for, say, 100 Swedish crowns and tomorrow. The price of Bitcoin has had a high level of volatility, so it is a relatively poor protector. ”
Riksbank also indicated that despite being accepted as a means of payment in a small number of places, BTC is not as widely accepted as credit cards:
“If the asset acts as a means of payment, a buyer must be able to use the asset to pay and a seller accepts it as payment. There is no exact figure about how many companies Bitcoin accept as a means of payment, but Coinmap has a maps service of several merchants that accept bitcoin and ATMs where you can buy bitcoins. On May 13, 2022 there were approximately 29,500 merchants and vending machines on the map. In comparison, visa cards are accepted by more than 60 million merchants. ”
Volatility is blamed
The Central Bank also declared that Bitcoin cannot be used as a account unit due to constant price changes. Declared the following:
“If the asset works as a unit of account, it can be used to set the price of goods and services. The two above features come into play because it is more difficult to set the price of something if the value of the asset fluctuates a lot or if it is not used as a means of payment. ”
Bitcoin does not match 3 criteria to be currency
Finally, he indicated that because Bitcoin does not meet the three criteria to be considered currency, consider BTC only as an asset, but not as a currency:
“Bitcoin generally does not fulfill the three functions and therefore is not money, at least not in the sense that it functions as money in the traditional financial system and in society. A reasoning similar to many other cryptocurrencies can be applied. ”