Dual Nature Of Cryptocurrency
The concept of duality in functionality first hit me when I was studying light — I read that light exhibit wave-particle duality, i.e it behaves as a wave and as a particle at the same time. This phenomenon is not peculiar to light alone.
Some other things also exhibit this phenomenon of duality, and one of such things is cryptocurrency. Yes, a lot of people haven’t heard or are soon to hear of cryptocurrency, even a number of those who despite haven known of cryptocurrency are still amateurs in the subject and thus, they have not heard about the “dual nature of cryptocurrency”.
Before i proceed, I will briefly expatiate on cryptocurrency.
Cryptocurrency is a digital currency built using cryptography, and using the block-chain technology to record and verify transactions. It exhibits the functions of the traditional fiat (paper money), except that it is decentralized and deflationary.
This decentralization and deflationary character gives cryptocurrency an edge over fiat.
Dual Nature of Crypto!
Think about this; What is an asset? What is a legal tender?
Majority if us knows what both an asset and a legal tender means. But to begin with, let’s describe an asset and a legal tender.
What is an asset?
In financial accounting, an asset is an economic resource. Anything tangible or intangible that can be owned or controlled to produce value and that is held by a company to produce positive economic value is an asset.
What is a legal tender?
Legal tender is a medium of payment recognized by a legal system to be valid for meeting a financial obligation. Paper currency and coins are common forms of legal tender in many countries.
The duality phenomenon as it applies to cryptocurrency includes the functionalities of asset and legal tender. (NB: Crypto as a legal tender cuts across international boundaries; it is accepted anywhere in the world).
- Value: The value of cryptocurrency increases with time, popularity in adoption, etc. As more and more people adopts it, its value rises. Hence it is an asset.
- It is deflationary: The supply is fixed and cannot be exceeded, this means that inflation is overruled.