Monetary Competition

As a peer-to-peer electronic form of cash, bitcoin was designed to fulfil the functions of money. It is therefore created with historically attractive monetary properties such as absolute scarcity, peer-to-peer electronic transactability, and a resistance to censorship.

With increasing levels of adoption, some of bitcoin’s monetary properties, such as liquidity and volatility, will improve its ability to function as money. If bitcoin adoption reaches global scale, there is a chance it could become as good at serving the functions of money as the most commonly used global currencies such as the US Dollar.

While bitcoin has the potential to become an increasingly globally adopted money, its success will depend on its ability to outcompete existing monetary competitors.