Bitcoin and Fiat Currency Comparative Research

Abstract

This study explores the feasibility of Bitcoin as a legal currency and a store of value in comparison to traditional fiat currencies. Through a comprehensive literature review and discussion, the study examines Bitcoin’s core characteristics such as circulation limitations, scarcity, price stability, intrinsic value, and associated security risks. The analysis highlights key challenges, including Bitcoin’s limited acceptance in global commerce, high volatility, and the potential risks posed by its decentralized nature. While Bitcoin’s scarcity and technological innovation position it as a unique asset, its viability as a mainstream currency remains uncertain due to its lack of regulatory support and price stability. The paper concludes that although Bitcoin holds promise as a digital asset, it faces significant obstacles in replacing fiat currencies as a stable medium of exchange or a reliable store of value. Recommendations are provided for governments and institutions on regulatory approaches and the integration of cryptocurrencies into the existing financial system.