The cryptocurrency market is receiving heightened attention from different institutions and individuals. At its initial stages, people thought that the digital currency experiment was far-fetched and would be short-lived. However, Bitcoin and other cryptos are growing stronger. Specific characteristics make these currencies a better option compared to fiat money. For instance, cryptocurrency operates on a decentralized system known as the blockchain. This means that digital currencies are not controlled centrally by third-parties. Multiple other qualities make digital currencies unique, and soon many governments and organizations will accept them. Keep reading for an in-depth assessment of why cryptos have a bright future.
The Concept of Decentralized System
Bitcoin and other digital currencies are supported by a decentralized technology called a blockchain. Decentralization implies that digital currencies aren’t under the supervision of any authority like governments and central banks. The system gives autonomy to users to make or receive payments without any interference from a third-party. Furthermore, through the decentralized system, Bitcoin users can evade taxes and other government charges.
Key Features of Cryptocurrency
Specific characteristics make digital currencies unique and attractive to many organizations and individuals. These include:
One of the key attributes that make digital currencies exceptional for various businesses and organizations is their low transaction costs. Whereas standard methods of sending and receiving money can be high, sending and receiving Bitcoins and other cryptocurrencies can be incredibly low. Businesses and individuals who want to evade credit/debit cards’ high costs may consider Bitcoin a viable alternative. And this trend continues as big companies are now warming up to digital currencies.
Many standard methods of payment take time to process and complete transactions. Credit/debit cards can take at least three days to complete settlements. Fortunately, this isn’t the case with cryptocurrencies, as Bitcoin payments are instant. Rapid payment methods can make your business move with minimal interruptions. Furthermore, specific tools like bitcoinprime.io can offer you prompt service.
Transactions that take time to complete can ruin your business, especially if you need cash urgently. Many people prefer Bitcoin because of the high speed of completing transactions.
Traditional payment methods are risky because they expose personal and financial information to third-parties and people with malicious intentions. Multiple incidents of fraud happen yearly due to exposure to information. And Bitcoin can solve the challenge. Information through blockchain technology is encrypted, and no third-party can access it or trace it to your persona. So cryptocurrency is the most secure method of payment. In the future, many people may consider choosing this method of payment because of its high level of security.
Hedge against Inflation
Fiat currency is subject to central banks’ policies, and sometimes they can favor the printing of more currency units. The decision may cause inflation that may impact the economy’s performance. The production of Bitcoin, on the other hand, is controlled and capped at 21million. This makes it the best store of value, which hedges against inflation. Bitcoin’s intrinsic value is similar to gold and other precious metals.
What the future holds for Bitcoin and other cryptocurrencies
Deutsche Bank asserts that the present fiat money system is fragile. Bitcoin’s popularity will continue rising to hit 200 million members by the year 2030. Through its report, Imagine 2030, the bank comments that Bitcoin and other digital currencies may finally substitute cash. Due to its anonymity and decentralized qualities, many individuals and institutions are embracing digital currency. Various signs serve to indicate that Bitcoin is the future currency. These include:
Many governments are warming up to the idea of a decentralized currency. Some are even thinking about how to set the ground for regulating the sector. While some people may argue that the sector should be independent of government control, others see the government’s regulation of the sector as a critical step that can attract more users. And the government’s gesture may further be evidence that the sector has a bright future because governments aren’t intending to ban it.
Most governments are finding the cryptocurrency sector a critical component of the economy because of its fast transactions. And the sector can accommodate the unbanked poor, who comprise the majority in some countries. A responsible government can support a system that delivers financial inclusion to many of its citizens.
Bitcoin is a store of value.
Bitcoin has multiple characteristics that make it a superior store of value than gold or other precious metals. For example, the digital current can’t be stolen. It’s easier to keep. It’s simple to transport, and nobody can take it from you with force. Furthermore, Bitcoin’s quantity is known. But, which of Bitcoin’s features play a critical role in making it the best future currency of the store of value? People form value. If you assess a diamond, or gold for that matter, you may find that they don’t do anything. You can’t consume them or use them for clothing.
The only thing you can do with these metals is to sell them to a willing individual. However, if you went to a remote location where people don’t value gold or diamond and offer them for sale, they will probably ridicule you.
The above illustration bolsters the point that precious metals are valuable because we have decided worldwide that they should be so. Therefore, if we decide on a global that Bitcoin should be a store of value because it’s better than gold, it’ll suddenly play that function. And people are staring at the possibility of Bitcoin being a store of value, as the planet has kept more than $100 billion in the asset.
Bitcoin as a medium of exchange
Already the digital currency is used globally as a medium of exchange. And this is a clear indication of what we expect soon: Bitcoin’s possibility is becoming an acceptable medium of exchange globally.
For the digital currency to play the role of being a global medium of exchange, it must overcome various challenges. It was created to overcome challenges related to security. Therefore, it sacrifices speed for safety. For the Bitcoin system’s full safety, it takes a long time to form blocks in the blockchain network. Although this makes it almost immune to attack, transactions go at a snail speed.
Another challenge with the blockchain technology that supports Bitcoin is that it’s a particular amount of space for each block. And this implies that if many people are using the network simultaneously, some of the transactions requested may not go through. And this creates some form of a waiting list.
Mass adoption likely to come soon
Multiple institutions and individuals are entertaining the idea of starting using Bitcoin as an alternative payment solution. In the recent past, a significant factor that has fuelled the adoption of cryptocurrency is the COVID-19 pandemic. During the pandemic, governments encouraged people to avoid using hard cash while making transactions. This was one of the measures introduced to curb the spread of the virus. And some people turned to Bitcoin because of its existence in digital form.
Furthermore, the pandemic interrupted the economic activities of most of the countries of the world. Stock markets were brought to a standstill, and transportation was hugely interrupted. Against this backdrop, people started looking for alternative investment vehicles, and Bitcoin became the best one.
Many people and organizations are crafting strategies for investing in Bitcoin because of the digital currency hedges against inflation. And this marks the beginning of mass adoption of the virtual currency as the demand for it keeps going up.
Because of its rising usage, Bitcoin is gaining acceptance worldwide as an alternative way of sending or receiving money. Furthermore, a sizable number of the population is using digital currency for investment purposes.
Many clients find Bitcoin a convenient way of carrying out their transactions because of a lack of third-party regulations. Although some people see the unregulated digital currency as a potential risk for criminality, the fact that a transaction is masked doesn’t imply criminality. Many people yearn for privacy when transacting, especially in online spaces. Due to this reason, many people will embrace Bitcoin in the future.
Why people rely on Bitcoin during the economic crisis
Because Bitcoin is unregulated by the government, it’s the best currency that individuals can use during a financial crisis. During such times, governments tend to control the issuance and circulation of fiat currency. And many people may lose trust in the fiat currency as a result of this. For example, banks may restrict the amount you can withdraw via an ATM. If the crisis is worse, the government can access money in their citizens’ bank account to help it service debts. In Greece, during the recession, the government confiscated 1.6 billion euros from citizens’ bank accounts to help repay sovereign debts.
However, Bitcoin is unique and offers citizens a different alternative that’s not prone to economic situations. Furthermore, the currency is not prone to government regulations. And citizens have much faith in themselves during financial crises.
Digital currencies are causing a revolution in the financial sector. Individuals and institutions are warming up to Bitcoin because of its multiple characteristics, as explained here. For example, the currency is more secure, anonymous, and a potential store of value.
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