At the current juncture of advancing internet technology, interest in digital currency is rapidly increasing. Recent events, such as the Luna incident, have made society and individuals wary of digital currencies while also paying attention to the possibility of their acceptance.
The underlying ideology behind the establishment of digital currencies is the desire to move away from centralized government control of markets.
Thus, the creation of digital currencies stems from ideas of overcoming variables like inflation and currency depreciation within markets.
A prominent example of digital currency is Bitcoin. Based on blockchain technology, Bitcoin has garnered increasing interest over time.
Since El Salvador’s recognition of Bitcoin as legal tender, more individuals are watching closely to see if digital currencies can gain societal acceptance.
Therefore, this article aims to approach the issue based on essential requirements for currency to be used within a market.
Firstly, currency must be stable. Despite potential value fluctuations due to economic conditions, currency inherently possesses stability or immutability, which is recognized in markets regardless of the era.
Thus, a currency that exhibits extreme volatility over short periods does not meet the conditions for recognition as a currency. Therefore, a currency must maintain stable and sustainable value.
Secondly, currency must be exchangeable, meaning individuals can use it to purchase goods and services.
In this context, currency should facilitate the exchange of specific goods or services. If it does not fulfill this role, it cannot be considered a currency.
Thirdly, currency must be acceptable in the market and society beyond individual recognition. Otherwise, it may be viewed simply as paper or plastic, lacking universal recognition of its value.
Fourthly, currency should possess universal characteristics, maintaining its value globally rather than being limited to specific regions or spaces.
Thus, currency enables various activities such as international trade, diplomacy, and investment.
Finally, currency requires responsible management to prepare for worst-case scenarios like market collapses.
Responsible management, such as central government oversight, can contribute significantly to economic stability through controlling currency supply and implementing appropriate financial policies.
For currency to exist, it needs these five essential qualities. When combined, currency gains recognition in society and can be universally accepted.
Conversely, digital currencies currently lack many of these qualities. For instance, Bitcoin’s extreme volatility and skepticism among individuals hinder its practical use in markets.
While there’s a strong investment trend in digital currencies, significant improvements are necessary for their market acceptance. Thus, individuals should critically evaluate the value of digital currencies and recognize the need for improvements.