Could Bitcoin Replace US Dollar in the Future?

Could Bitcoin Replace US Dollar in the Future? The biggest proponents of Bitcoin and other digital currencies are hoping that sometime in the future, Bitcoin will replace standard currencies as the everyday method of payment. However, at this moment that is far from reality, as Bitcoin is still in its initial stages of development. The value of Bitcoin has been booming in the last two or three months but it’s nowhere near from being stable enough to replace standard currencies.

However, that does not mean that Bitcoin and other digital currencies will not create a revolution in the global financial market and some would claim that they already have done that. Many Bitcoin proponents believe that eventually Bitcoin will create the so called new gold standard. The main argument those people are using is the fact that the number of Bitcoins that could potentially be in the circulation is limited. On the other hand, the amount of the standard currencies in the circulation is unlimited and new money is being printed every day.

Do We Have too many Cryptocurrencies?

Those who are not so optimistic about the future of Bitcoin state that while the number of Bitcoins might be limited, the number of various digital currencies is not. New digital currencies appear on a regular basis and that is something that could cause serious problems for Bitcoin as well as other digital currencies in the market. Besides that, the fact that start-up companies have realized that they can create their own digital currencies and sell them to investors in order to raise funds might be even more problematic for those aspirations that Bitcoin proponents have.

Another argument in the debates about the potential for Bitcoin to take down dollar is the fact that Bitcoin has been very volatile and unstable. The value of Bitcoin keeps going up and down constantly, while the value of standard currencies remains pretty much the same for a long time. True, the value of standard currencies also fluctuates but those fluctuations are very small and they do not influence the market capitalization of that currency to such an extent.

Too much Volatility

Hence those people believe that Bitcoin will not become the standard method of payment and the reason is the fact that people do not want to lose one-fifth of their paycheck or even more between the day they receive a paycheck and the day they go shopping. Besides Bitcoin and the digital currency market in total is generally unregulated, which leaves a lot of space for misuse of those digital currencies. The biggest problems so far have been the cases of money laundering and terrorism financing that involved digital currencies.

Yet that is not that strong argument in this debate as standard currencies are being used much more in the same illegal activities and no expert has ever said anything against those currencies nor has any of those experts use that fact as an argument to argue against the standard currencies. All in all, Bitcoin and other digital currencies have displayed some problems and they would have to be solved systematically in order for Bitcoin to achieve all the aspirations that its biggest proponents have. However, looking at the previous experience and the predictions, the future looks very bright not only for Bitcoin but for other digital currencies as well.

Written by Ivan Potocki

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