Bitcoin, the one thing that most people are talking about after COVID-19 and despite the recent price volatility and a surging global macroeconomic uncertainty, in so many ways, 2020 was a good year for the already soaring currency. Globally, the concept of bitcoin and cryptocurrencies is still very new which explains why most businesses and private individuals are still very apprehensive about adopting cryptocurrencies.
Is Bitcoin and other Cryptocurrencies here to stay?
Since their inception, these digital currencies have developed somewhat a love-hate relationship wherein one end of the spectrum, we have people who are so passionate about these currencies whereas on the other end we have people who despise the cryptocurrencies a lot. Over the years, Bitcoin, the original cryptocurrency, has been predicted to fall but that has not happened to date which you have to admit, as a new form of currency, it is not doing that bad. While it has had some ups and downs, and many of the times, in fact, more often than not counted out, the currency has bounced back dramatically, soaring higher and higher every time. But still, what most people are asking is whether these currencies are here to stay.
Somehow, Bitcoin has managed to ‘infiltrate’ the world economies and managed to be a major player which in part answers the question, “what is the future of Currency?” we have to agree that bitcoin and other cryptocurrencies are now becoming a semi-permanent feature of the world financial landscape. Even so, Bitcoin and other cryptocurrencies are yet to be accepted as a day-to-day currency.
While many retailers around the world are slowly accepting this transformational technology, the overwhelming majority of the day-to-day transactions are still done in the old fiat currency. One thing is however apparent, the mere fact that we are still placing a dollar value on the price of bitcoin says a lot. It indicates that Bitcoin’s central value is a speculative asset, rather than a useful medium of exchange.
Perhaps to understand where this currency is coming from and why we need to take it more seriously, we have to go back to its inception, 2009. This was the year Bitcoin hit the scenes, and at the time, it was worth zero in terms of market value and participation. Very fresh off the block, the currency starts to make a solid crawl in 2010 establishing a dollar value of .39 cents. Fast forward to 2011, the relatively new currency achieves parity with the U.S. Dollar, on the Mr. Gox Exhange. If you think about this for a moment, you will realize that this currency has cemented its place in the global marketplace despite every formable opponent of opposition to its stay and establishment.
Today, the currency weighs in with a market share of around $133 billion dollars standing alone. If you combine it with other altcoins, you get about $209 billion dollars worth of value. Perhaps enabling this frenzy rise of Bitcoin and other altcoins is the hyperinflation of the dollar, which will bring about three major contenders for the #1 spot at the title of global reserve go-to money- gold, silver, and crypto.
Bitcoins’ Volatility: A Major Inhibitor
The main reason why people are still very cautious about this currency is its price volatility. Perhaps, people don’t want to hang onto the currency for long. Think about it, you get a paycheck today and by the time you are cashing it out, you find that it has halved in value. If that factor was ruled out, I think most of us would be owning Bitcoins by now. Gold is undoubtedly a hard knockout with a 9trillion dollar market cap, but optimists argue that the price value of the altcoins will definitely go up in time and eventually surpass that of gold. One Bitcoin today is worth four ounces of gold.
Coming in second place is silver that wings at about .5 to 1 trillion dollar market cap. Interestingly, there are more silver contracts in the marketplace than there is actual silver unearthed, which means, silver actually does have more than enough real-life intrinsic value to give it enormous upside potential. With the current global health pandemic, it puts these three top contenders currencies in a stiff race; do they have what it takes to rise into the #1 spot of a global go-to place for value?
What Currency will Survive?
At the time of writing this blog, bitcoin is valued at $34,576.20, gold sits at $1,851.41 (an Ounce), and lastly silver $25.49 an ounce. For a long time now, the dollar has been used as a standard measure for value, but now it is under some serious scrutiny about its ability to be valuable as the world reserve currency. Is it time to go to Bitcoin? Maybe, but what’s clear now is that this currency is able to withstand a great deal of pessimism and severe monetary crises. Yes, in times of chaos and amidst all the rumors and threats of the shutdown, Bitcoin has gone down, found its bottom, and catapulted to newer and greater heights.
Nations around the globe are turning towards digital currency to help stabilize their economies, some few good examples are; Venezuela, Lebanon, Zimbabwe, Nigeria, and South Africa. Also, we cannot ignore what’s happening behind the curtains; Bitcoin is winning some major rounds with big tech companies integrating Bitcoin into their monetary systems. Interestingly, big banks are also joining the movement, the likes of Fidelity, USAA, and Goldman Sachs. It seems all odds are for the digital currencies, as big nations such as Japan, Russia, and Australia are cozying up to the idea and the promise of Bitcoin.
The Best Is Yet To Come
Given that this currency is relatively very new, it is safe to say that the potential for growth is enormous as we continue to grapple with financial uncertainty, workforce reductions, and bailouts to Big economy Players that for long have over inflated the dollar deflating peoples efforts and their store equity of value.
This comes in as a reality check and a wake-up call to most people that the fiat currencies are not holding any value for their money. Perhaps the jab that brings Bitcoin off the ropes one last time for a grandstand performance, minting another round of millionaires and billionaires. In the first round where the equivalent of $1 in Bitcoin in 2009 would now roughly be $25 million dollars in value, Bitcoin stepped up as a major contender. The second round could be the round where Bitcoin becomes the undisputed champion of a global peer-to-peer currency system, used by any and everyone, everywhere!