We can all agree that Bitcoin or BTC is a truly exciting currency. Since 2009 when Satoshi Nakamoto published the whitepaper that detailed the peer-to-peer technology (blockchain) which brought about cryptocurrencies, the world has not remained the same. In less than ten years, we have seen thousands of alternative coins spring up, millions of people adopting the currency, and billions of dollars raised in ICO.
While it might appear as though this development presages good tidings for bitcoins and cryptocurrencies, we have reason to believe otherwise. Do you ever picture a future where Bitcoin usurps the U.S. Dollars and becomes a globally-accepted legal tender? Before you begin to paint a portrait, let’s see some characteristics of money.
What are the Characteristics of a Fiat Currency?
- It is a Valid Medium of Exchange
- It should serve as a means of storing the value
- It should be a unit of account
Does Bitcoin meet some of this requirement? Sure! Several merchants all over the world are now accepting Bitcoin as a means of payment. In fact, popular platforms like Microsoft and Google already launched an API which allows payments with Bitcoins. We also have Bitcoin ATMs flooding selected states all over the world.
However, when it comes to storing value, Bitcoin fails woefully at this. At the beginning of 2017, Bitcoin value was less than a thousand dollars ($1000). In 12 months, the value soared and 1 BTC was going for almost twenty thousand dollars ($20,000). As at June 2018, 1 Bitcoin in the market will give you $6000 in cash.
In addition, it is not yet a unit of account. For instance, no one refers to consumer credit or loans in terms of Bitcoins, at least not yet. This is because one Bitcoin today is literally not worth 1 Bitcoin tomorrow.
Apart from all these, there are other disconcerting factors about Bitcoin which precludes its chances of becoming a legal tender. They are discussed below.
Bitcoin Isn’t a Government-Backed Legal Tender
The above heading might not be an actual portrait of the scenario. The truth is that the Government is actively against Bitcoin and cryptocurrencies in general. The singular trait which makes Bitcoin alluring to certain investors is anonymity and this same attribute encourages tax evasion, money laundering, and other illicit trades. In view of this, there’s no way the government can support cryptocurrencies, at least for now.
Bitcoin Isn’t Capable of Serving 7 Billion People Yet
At the moment, it is estimated that about 1 million people use Bitcoin for daily transactions. For a cryptocurrency currency that is just 9 years old, this is highly commendable; however, it doesn’t cut the mustard. If Bitcoin is going to become a fiat currency, it has to comfortably attend to the needs of the world population. Right now, we still have people complaining about delays and other flaws in the transaction. Hence, Bitcoin still has a long way to go.
All in all, Bitcoin is tipped to grow further and still enjoy widespread adoption in the coming years. BTC still ranks as the most valuable cryptocurrency in the cryptocurrency market and its market capitalization is about 150 billion dollars. Perhaps, a paradigm shift can occur in the future and Bitcoin will become government-friendly. Only time will tell.