Man explains why he chose to take his entire salary in Bitcoin

Bitcoin is the first and by far the most famous of a new breed of “cryptocurrency” – designed to let people operate independently of banks and national governments.

You’ll have heard stories of the fabulous wealth early adopters made – seeing their Bitcoins rise in value from a few pence to thousands of pounds each.

Then there are the stories of people who lost cash – getting in at the wrong time only to see three quarters of their money vanish as Bitcoin’s price plummeted.

But is it something you can actually use as money?

Well, earlier this year cryprocurrency firm CoinCorner decided that – if they wanted – staff could choose to take their salaries in Bitcoins instead of pounds and pence.

Zakk Lakin decided to do just that – and have his entire salary paid in Bitcoin.

Is Bitcoin ‘real’ money then?


 

The great economist Adam Smith argued that currency had three functions – as a store of value, a medium of exchange and a unit of account.

Using that test, Bitcoin fails.

Last year Bank of England governor Mark Carney pointed out that as a store of value, Bitcoin is too volatile.

A Bitcoin now is worth three times what it was worth in January, twice what it was worth in March and about half what it was worth in late 2017.

“Consider that if you had taken out a £1,000 student loan in Bitcoin in last December [2017] to pay your sterling living costs for next year, you’d be short about £500 right now. If you’d done the same last September, you’d be ahead by £2,000. That’s quite a lottery,” Carney said.

When it comes to acting as a medium of exchange, there are more problems.

“If you use a debit or credit card in the UK, the transaction is completed in seconds and without exchange rate risk. In contrast, Bitcoin users can face queues of hours,” Carney said.

Then there are the fees – which range from £40 to £2 – and that’s if you can find someone willing to accept them.

If not, you need to swap them into standard…

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