Bitcoin, a digital currency created in 2008, has experienced rapid growth, with its value rising significantly in late 2013. However, David Yermack argues that Bitcoin does not function as a traditional currency but rather as a speculative investment. He examines Bitcoin's historical trading behavior and finds that it exhibits high volatility and lacks the stability required for a reliable store of value or unit of account. Bitcoin's exchange rate has virtually no correlation with other major currencies, making it difficult to hedge against risk. It also lacks access to a banking system with deposit insurance and is not used in consumer credit or loan contracts. These factors suggest that Bitcoin behaves more like a speculative investment than a currency. Bitcoin's value is tied to its algorithmic supply and growth rate, which are determined by mathematical rules. Unlike traditional currencies, Bitcoin is not issued by a government and is not backed by any physical asset. It is governed by cryptographic rules and is decentralized. Bitcoin's circulation began among online enthusiasts and later expanded to exchanges like Mt. Gox. Despite its growth, Bitcoin faces challenges in establishing itself as a legitimate currency. Its high volatility and lack of correlation with other currencies make it unsuitable for risk management. Additionally, Bitcoin's supply is capped at 21 million units, which could lead to deflationary pressures if it becomes widely adopted. Bitcoin's integration into the global financial system is limited, and it lacks the infrastructure of traditional currencies, such as access to banking systems and financial derivatives. These obstacles hinder its ability to function as a stable currency. While Bitcoin has attracted attention for its potential as an alternative to traditional currencies, its characteristics suggest that it is more suited to speculative investment than to serving as a reliable medium of exchange, unit of account, or store of value.Bitcoin, a digital currency created in 2008, has experienced rapid growth, with its value rising significantly in late 2013. However, David Yermack argues that Bitcoin does not function as a traditional currency but rather as a speculative investment. He examines Bitcoin's historical trading behavior and finds that it exhibits high volatility and lacks the stability required for a reliable store of value or unit of account. Bitcoin's exchange rate has virtually no correlation with other major currencies, making it difficult to hedge against risk. It also lacks access to a banking system with deposit insurance and is not used in consumer credit or loan contracts. These factors suggest that Bitcoin behaves more like a speculative investment than a currency. Bitcoin's value is tied to its algorithmic supply and growth rate, which are determined by mathematical rules. Unlike traditional currencies, Bitcoin is not issued by a government and is not backed by any physical asset. It is governed by cryptographic rules and is decentralized. Bitcoin's circulation began among online enthusiasts and later expanded to exchanges like Mt. Gox. Despite its growth, Bitcoin faces challenges in establishing itself as a legitimate currency. Its high volatility and lack of correlation with other currencies make it unsuitable for risk management. Additionally, Bitcoin's supply is capped at 21 million units, which could lead to deflationary pressures if it becomes widely adopted. Bitcoin's integration into the global financial system is limited, and it lacks the infrastructure of traditional currencies, such as access to banking systems and financial derivatives. These obstacles hinder its ability to function as a stable currency. While Bitcoin has attracted attention for its potential as an alternative to traditional currencies, its characteristics suggest that it is more suited to speculative investment than to serving as a reliable medium of exchange, unit of account, or store of value.