Bitcoin and Ethereum Should be Used as Collateral Rather a Medium of Exchange-Chris Burniske

Partner at venture capital firm Placeholder, Chris Burniske is a well-known personality in the crypto space. Settling the debate of bitcoin’s primary use case, Burniske straightforwardly shared his consent of viewing bitcoin as a store of value. Afterward, sharing his views on the cryptocurrencies acting as a store of value such as bitcoin, ethereum, etc, he continued that he expects them to become popular collateral.

1/ Long run, I expect assets that aim to be a store-of-value (eg, $BTC, $DCR, $ETH) to be much more widely used as collateral than as a means-of-exchange.

— Chris Burniske (@cburniske) November 17, 2019

At the moment, bitcoin regarded as digital gold is viewed as more of a store of value than a medium of exchange. In fact, in the long run, the success of bitcoin depends on it becoming a medium of exchange because the creator bitcoin envisioned bitcoin to become a unique peer to peer payment system. In order to meet the expectations of its creator, Satoshi Nakamoto, and fulfill its primary aim, bitcoin needs to become a medium of exchange.

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However, according to Burniske, bitcoin along with some other cryptos might become collateral, an asset that is accepted by a lender as security. Under the circumstance of a borrower defaulting his payments loan, the lender can make up for his losses by seizing or selling the collateral.

As bitcoin is extremely volatile and unpredictable, the adversaries of cryptocurrencies have often criticized bitcoin a lot and argued that bitcoin can never ever become a medium of exchange with its signature volatile attributes. Burniske differs a bit from these adversaries as he despite not seeing bitcoin and ethereum as a medium expects them to become collaterals. Elaborating on his idea, he further said:

8/ Maybe one-day $BTC as a PoW-based SoV will be considered “off-chain” collateral for the world (exogenously secured).

Meanwhile, $ETH as a PoS-based SoV will be the internet’s “on-chain” collateral (endogenously secured).

— Chris Burniske (@cburniske) November 17, 2019

Although bitcoin’s growth over the years has been remarkable, the largest cryptocurrency of the world by market cap, besides volatility, is also facing scalability issues which hinders its journey to become a medium of exchange. Let’s see if bitcoin meets Burniske’s expectations in the future.

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