As I pointed out in the start of the essay The Revolution of Bitcoin Banking, we are still in the 11th century of online exchange with bitcoin. Today we are slinging around digital coins online with very real value; which has no difference from paying for any goods or services with gold or cash. While this does not seem to be an issue at this time, we need to remember that we live in a modern society where such basic transactions hit their limits quite quickly. What we need are complex forms of contracts that can create debt, insurance, and other forms of contracts. In other words, we need real finance and not just money.
While I don’t believe that bitcoin will ever fade as a storage of value, it does seem to be a strong payments system. While the ‘is bitcoin a payment or storage of value system’ debate has been going on from the start of bitcoin, it has more recently picked up steam with the blocksize debate. Regardless if bitcoin does increase the blocksize or not, it may not matter very soon, and that is because of another star we are seeing rising to take bitcoin’s place not as a money system, but as a finance system: Ethereum
Ethereum was developed by Vitalik Buterin in late 2013. It was not developed as an altcoin, but rather as a full contracts platform to be able to work as a layer on top of bitcoin, or any other digital currency for that matter. To steal a remark I saw on /r/Ethereum, bitcoin is to digital gold as ethereum is to digital oil. Ethereum purpose isn’t to be a deflationary money like bitcoin, but a contract platform and the engine of digital finance.
Perhaps this will finally answer the question; is bitcoin a storage of value or a payment system? It seems as though it can work as the later, but it is better as the former. Whereas Ethereum was built specifically to create contacts and has a higher inflation rate to account for the more robust use of Ethereum. What bitcoin is to hard money, Ethereum is to finance.
Ethereum enables the bitcoin bank that I speak of in The Revolution of Bitcoin Banking. What this can realistically do is create a robust full banking and finance platform that is completed decentralized and non-state based. This is how the internet not only gets its own money, but its own banking system, economy, and the tools for digital natives to secede from our current economies to new digital ones.
Ethereum is the ubermensch of bitcoin. It not only wants to be everything that bitcoin is, but it goes over and beyond bitcoin to create something larger, something beyond it. Bitcoin has masqueraded as a payment system for long enough, and now it can come to do that which it was made for: to become the storage of value for the modern technological world, and to create the base value for the future digital economies that will come to govern the world.