Do Cryptocurrencies Meet the Criteria for Currencies? Menssonent 2) Bitcoin is an Unreliable Unit of Account Division
Illustrative Pricing: US$ vs. Bitcoin as a Unit of Account
January 2nd 2017: November 14th 2017: 1 Bitcoin = 1 Bitcoin = $1,012 = $6,590 = 1 Bosch Dishwasher ($1,079) 6 Bosch Dishwashers ($6,474)
= Bitcoin’s rapid appreciation makes it an unsatisfactory candidate as a unit of account.
= In January, one could have purchased a dishwasher for one bitcoin. Today, it would cost 1/6 a bitcoin to buy the unit, implying severe deflation over the past several months.
= In deflationary environments, people hoard their money in order to buy goods more cheaply at a later date, which has prompted most people to hoard their bitcoin.
Source: Investment Strategy Group, Bloomberg, Cryptocompare.com. 14
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