The world of cryptocurrencies is fast-evolving. Bitcoin was created in 2009. It has been almost 10 years since we've heard of digital currencies. Can Bitcoin become one day a mainstream currency like the US dollar?
Bitcoin - the first cryptocurrency
Bitcoin is a digital currency based on the blockchain, the revolutionary technology that everyone talks about. The digital currency serves as a commodity or as a means of payment for online transactions and for services. Since its launch, Bitcoin rose to stardom as the leading cryptocurrency, and experts predict its market capitalization will catch up with Apple within 5 years. The market capitalization indicates the circulation and value of a digital currency, and is calculated by multiplying the total number of Bitcoins in circulation by the Bitcoin price.
Unstable, the Bitcoin price fluctuates a lot. After a plunge early this year, Bitcoin price rose up again. On August 8, 2018, 1 bitcoin equals USD 6,537.48. Can Bitcoin, which is often referred to as “digital gold”, become a mainstream currency?
A worldwide game changer
No countries have legalized Bitcoin as an official currency, and some countries including Algeria or Ecuador have banned it. Today, Bitcoin is very popular in Switzerland, Sweden, the UK, the US, and Japan. However, initially Bitcoin used to be considered as a means of payment for illicit goods or services. The example of Silk Road remains in the minds of many, as bitcoins were used to buy illegal products through the “dark web”. Nonetheless, Bitcoin survived the crisis. Today, more and more people embrace the values of the blockchain and see Bitcoin as a game-changer.
Can bitcoin become mass-adopted?
Investopedia defines a mainstream currency as follow: “Currency is a generally accepted form of money, including coins and paper notes, which is issued by a government and circulated within an economy. Used as a medium of exchange for goods and services, currency is the basis for trade.”
According to Bitcoin Market Journal, over 5,8 million people use Bitcoin and approximately 22 million Bitcoin wallets are registered on cryptocurrency exchange CoinBase. Furthermore, Bitcoin adoption is exploding in emerging markets facing economic instability such as South Africa or Colombia. But Bitcoin user base remains small compared to PayPal, which boasts 235 million users globally.
Bitcoin: An asset or the currency of tomorrow?
Many governments see cryptocurrencies as a potential threat to the stability of the global economy, as seen in the case of France. By definition, cryptocurrencies are not linked to any government. Hence, they do not match the criteria of a mainstream currency according to Investopedia. A currency should be as steady as possible, but the price volatility of Bitcoin makes it unstable. But Bitcoin enthusiasts claim that the digital currency will soon reach worldwide acceptance. However, Bitcoin is still considered as an asset class rather than a currency.
Bitcoin, and Blockchain in general, are shaking the global finance industry. With a user base growing exponentially, Bitcoin may soon rival digital payment platforms such as PayPal or even the US dollar. Lovers of Bitcoin call it a currency already. But no countries have adopted Bitcoin as a legal tender yet. There is still some time until "digital gold" becomes the new US dollar.
Picture from Unsplash.
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Freelance Writer / Blockchain and Crypto Enthusiast.