Here’s the thing – this article has no intention to convince anyone to buy or sell bitcoin nor to believe it is the currency of the future that will replace fiat currencies and will make the economic systems much more “fair”. Nope, not at all.
Surely, bitcoin is a revolutionary idea – a new currency with a limited supply that is not controlled by any government. Whether you are an anarchist or not, you must like it. But, at the same time, there are so many comments regarding bitcoin, even claims that it is a scam, a pyramid, an illusion that is going to fade very soon.
The truth, in my opinion at least, is somewhere in the middle.
Bitcoin could be another means of exchange in the currency global system
In the beginning, Bitcoin was developed and then promoted against the monetary system of central banks that print money and create an inflationary pressure on people’s lives. But now, particularly following the covid-19 pandemic when governments printed more money than ever to prevail the crisis, it’s not clear if people actually want to have a currency that cannot be controlled. In that aspect, there’s sort of a misconception that printing money is bad, but since the 2008 crisis, this is a strong question – whether printing money is good or bad.
In general, bitcoin was aiming much higher than just being another means of exchange. The idea that it will replace the current monetary system and become the dominant currency in the world is most likely, not the most realistic scenario. After all, people still believe in countries, governments, and… someone to blame if something goes wrong. This is something that bitcoin probably could never provide – trust. And this is perhaps the most important element of the economic system.
While it is definitely true that bitcoin does have some serious problems, it could, eventually, be another currency in our system. Just another currency, that’s it. The US dollar, Euro, British Pounds, and all these currencies will still be a big part of the future, along with… bitcoin (and maybe Dogecoin…).
But seriously, a few years ago I was traveling around the world using a traveler’s cheque, Western Union, and credit cards just to be able to get money when I’m abroad. Crazy fees, not convenient, annoying, always a feeling that someone is ripping you off, and, you don’t really know who.
Further, these days so many people transfer funds across borders, getting salaries and payments on online money services – freelancers, small businesses, etc. Again, the conversion fees, commissions, the hassle, the complicated process – something is not fair, at least in my view.
If bitcoin could solve just some of the problems of fiat currencies, then yes I’m definitely a bitcoin fan. And if not, that’s also fine. I still support it because it’s a good idea as it tries to solve something.
The bottom line – no one knows what’s the future of bitcoin
Very often, I hear people say that bitcoin does not have value because there’s nothing behind the coin – no country, government, GDP, insurance, production, etc. In contrast, our economic system works in a very strange way that even dead people have some sort of value. So, why Bitcoin could not have value? I mean, it already has value so we pretty much answered this question.
The bottom line and the important aspect in the case of bitcoin is that its price is irrelevant. A lot of people also say that bitcoin is a bubble because of its high valuation, which is true to a certain degree. But there are many commodities and resources on the planet that have a limited supply so it’s hard to find equilibrium. For example, there is sort of a limited supply of houses around the world so real estate prices will always be on the rise for the long term. But eventually, it doesn’t matter what Bitcoin’s price will be in the future – it could be $6 or it could be $600K. But it takes time to find equilibrium, especially for a new means of exchange like Bitcoin that is challenging the financial system.
Looking ahead, it also takes time for new things to catch and become the standard. Credit cards were not accepted at the beginning by the public like many other new inventions (even toilets seat cover). And who knows, maybe, in the end, bitcoin will not be the digital currency of the future.
But right now, bitcoin is the most interesting phenomenon in global markets. If its price will stabilizes in the near future and more businesses will adopt it as a payment form (such as in the case of PayPal and maybe Amazon) – then bitcoin could become the currency of choice for individuals. Presumably, it won’t replace the current financial system in any way. But then, we could have a financial system with controlled fiat currencies as well as one uncontrolled digital asset called bitcoin (or only a few – no need for new unnecessary digital assets).
At last, the most important thing is that the people behind bitcoin and crypto exchanges will maintain a fair environment for bitcoin in terms of fees, conversion rates, etc. No hassles and greedy operations – that was the initial idea of bitcoin, to remove unnecessary third-party involvement and central banks’ intervention. And… no more forks that are similar to the idea of printing new money. Just bitcoin, a digital asset that works on the alleged genuine blockchain technology, as another currency… After all, bitcoin is just a currency.