It may sound ridiculous to think about such a question, but perhaps BTC does indeed have a chance at becoming a worldwide currency, no matter how little. Obviously, the major bankers and some notable investors, including Warren Buffet, have claimed that BTC and other cryptocurrencies are going to fail. Then there is another school of thought, one that sees value in the underlying blockchain technology, rather than the coins themselves. Regardless of whichever side you lean on, it is certainly a matter worth considering, which is what I shall attempt to do.
Can BTC be considered as money?
I suppose the main argument concerning BTC’s possible future use as worldwide currency will depend on whether BTC actually is money. Technically speaking, cryptocurrencies can be considered as money as they share most characteristics of money. The table below outlines the characteristics of cryptocurrencies that make them similar to money. In fact, in some aspects, crypto even beats fiat currency and even the archaic gold standard. (Find all: The lowdown on cryptocurrency)
For example, when it comes to security, cryptocurrencies have a lot more security than fiat currency. According to the US Department of treasury, there is a counterfeit bill for every 10,000 in circulation. On the other hand, there hasn’t been a single case of fake BTC in the almost 10 years it has been in circulation. (The: 5 Tips to Choosing the Ideal Cryptocurrency Exchange?)
However, simply because BTC shares most characteristics as money doesn’t mean it automatically qualifies to be the worldwide currency. One of the most important characteristics of money is its stability in value. Once a currency becomes too volatile, then it can no longer be trusted by the people. Just look at what happened in Zimbabwe after there was a case of hyperinflation and the residents switched to using the US dollar.
Even the US dollar used to be backed by gold where its value fluctuated with the value of gold. Then in 1971, Richard Nixon decoupled the US dollar from gold to make it a fiat currency. The reason for that move was the high rate of inflation on the US dollar. Instead of that system, the US government figured their currency would be more stable if it were responsible for monetary policies. (The: 5 Most Popular Uses of BTC and other Coins)
Now when you look at BTC, there is a very high level of volatility. According to the BTC Volatility Index, there has been a 6.71% volatility in BTC over the past 30 days. Now consider that most global currencies have an average volatility of between 0.5% and 1.0% while the average volatility of gold is about 1.2%. If a 1.2% volatility in gold was capable of throwing the US dollar’s inflation rate all over the map, how much more could BTC? (Learn the: 10 Most Important Resources to a Cryptocurrency Trader)
The case for a BTC worldwide currency
Out of all these images and arguments, it doesn’t look likely that BTC can replace fiat currencies and become the worldwide currency. At least not anytime soon. Nevertheless, it is important to realize that the stability of fiat currencies is entirely in the hands of those who control it. These are usually the central banks, and if they screw up anything, then the whole system falls apart. This was the case for Zimbabwe, when their Central Bank started printing more money. (Find out about: Cryptocurrency Regulations Around the World)
This was actually the problem laid out by Satoshi Nakamoto in his/her whitepaper regarding BTC. The whitepaper was published recently after the 2008 economic recession that showed how irresponsible the authorities were regarding money. Instead of trusting all people’s money on the hands of a few, why not leave it to thousands? An argument in favour of using BTC as the worldwide currency could be made if this property of cryptocurrencies is recognized. (Master these: 5 tips to forming the most promising cryptocurrency investment portfolio for 2018)
Besides, BTC could make for an excellent worldwide currency now that we are fast approaching the information age. Unlike fiat currencies, there would not be a need for exchanging among different currencies, as BTC is not bound by geographic location. Furthermore, BTC is far more cheaper and faster than conventional money transfer systems. (These are the: Basic Cryptocurrency Terms You Need To Know)
Why BTC may not work as a worldwide currency
For any argument, you have to consider that there are merits to another perspective. In the case of BTC, it comes down to the technological problems it faces. For so long, there has been a debate on how to fix BTC’s scaling problems. Due to the 1MB cap on block sizes, there was a limit on how many transactions could be confirmed per second – about 7. Due to increased demand, there was a huge backlog of unconfirmed transactions, which also led to increased transaction costs. Due to such problems, BTC may not be the best cryptocurrency for a worldwide currency. Even some of BTC forks have a better chance. (Do you know: What Will Be The Impact Of A BTC Fork?)
What global financial authorities have to say about BTC
It is fine for crypto-anarchists who believe they are breaking the system by using BTC but the truth is actually more boring. In order to make BTC the worldwide currency, the central banks have to jump on board and support it. So far, the only country to accept BTC as legal tender is Japan where you can even pay utility bills with it. Several other countries are also considering the same move, although they still seem reluctant. Meanwhile, the CFTC has classified BTC as a commodity, which is why they allowed the trading of BTC ETFs. (These are the: The 3 Most Trusted Exchange Authorities in The World)
Nevertheless, even the authorities have acknowledged the applications of the underlying blockchain technology and are working on creating their own blockchains. The Russian government, for example, recently announced that they were testing to see if blockchain technology in voting. Additionally, several major banks have already gone several steps ahead. Russia’s biggest bank, Sberbank, is testing blockchain technology while many other banks are doing the same. (Comparing: BTC Cash Vs. BTC: Confrontation Forecast in 2018)
If we consider how long it takes for a currency to take hold and begin to be accepted as legal tender, then BTC has certainly got a very long way to go. In its under a decade long existence, most of it has been spent in negative criticism and apprehension. Regardless, BTC has proved it is here to stay despite the criticism, but it will take many years or even decades before it can be considered a worldwide currency. For now, the developers simply need to focus their efforts on building the technology itself to make it foolproof.
You think my ideas are crazy? Just listen to this conspiracy nut try and associate BTC with ‘The New World Order’: