Bitcoin is only a decade old but it has come a long way on the path to becoming money. A couple of metrics to consider are precision of spending and unit of account status.<\/p>\n
When bitcoin was first envisioned back in 2009 it was largely experimental. For its first year, tens of thousands of them were fired across networks just to see what happened.<\/p>\n
The first real world transaction occurred in 2010 when Laszlo Hanyecz famously asked for pizza on the bitcointalk forum in exchange for 10,000 BTC. He received a $25 order of pizza in exchange for the coins marking the first ever transaction for a tangible asset.<\/p>\n
It went from magic worthless internet money to something with real value, which was the desired intention for the transaction. At todays bitcoin prices that pizza would be worth $90 million.<\/p>\n
BitMEX Research has delved deeper into the precision of spending on the bitcoin network to reveal how the accuracy has improved over time.<\/p>\n
By dividing outputs into groups increasing by a power of ten (from 1 satoshi to 100k BTC) and plotting the results on a chart it is clear to see the increase in precision over the past decade.<\/p>\n
Currently over 70% of Bitcoin outputs use the highest available degree of precision (one satoshi), considerable growth since the c40% level in 2012.<\/p>\n
The report concluded that an increase in precision would be beneficial to privacy based on the way bitcoin transactions work with UTXOs.<\/p>\n
As our data shows, the level of precision is increasing, such that most outputs now have the maximum level of precision. This could inadvertently be positive news from a privacy perspective.<\/p>\n
The study went on to state that bitcoin needs to achieve three major steps before it can be considered the same status as money.<\/p>\n
Firstly it needs to be used as a medium of exchange which is already happening, driven by its potential unique capability: censorship resistant electronic payments.<\/p>\n
The second step has been clearly evidenced this month and that is its status as a store of value. With market movements mirroring the worlds largest store of value, gold, bitcoin is being viewed in the same light, especially in times of adversity.<\/p>\n
Thirdly is the unit of account status. This is when goods and services are priced in bitcoin, or satoshis in this case. This is still a very long way off due to price volatility as BTC is still primarily a vehicle for speculation. There are also a number of factors that need to happen to the technology before it sees mass adoption.<\/p>\n
It added that if this does finally occur then the degree of precision may decrease due to the assets increased use as a unit of account.<\/p>\n
How long will it take for bitcoin to have money status? Add your comments below.<\/p>\n
Images via Shutterstock<\/p>\n
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