Weblog and Essays. Let's Clear Up One Confusion About Bitcoin November 3, 2017 If bitcoin can be converted into fiat currencies at a lower transaction cost than the fiat-to-fiat conversions made by banks and credit card companies, it's a superior means of exchange. One of the most common comments I hear from bitcoin skeptics goes something like this:Bitcoin isn't real money until I can buy a cup of coffee with it. In other words, bitcoin fails the first of the two core tests of "money": that it is a means of exchange and a store of value. If we can't buy a cup of coffee with bitcoin, it obviously doesn't qualify as a means of exchange. The confusion here is the same one that plagues the conventional understanding of the foreign exchange markets: people confuse exchange and convertibility, which are both flows, i.e. transactions.
Here's an illustration of the difference. Let's say Hipster Coffee Bar accepts payment in bitcoin (BTC) for a cup of coffee. Consider a credit card. What is privilege? JonBischke.com | Just another WordPress weblog. OpenLearn - The Open University. Academic Earth | Online Courses | Academic Video Lectures. Beta) | Learning for everyone, by everyone, about almost anything. Economic Policy Institute.