What’s the future of Bitcoin and cryptocurrency in general? Will I be able to buy a new car with Bitcoin? Or will I get a new smartphone using cryptocurrency? Well, these are not possible at the moment; you still need to use fiat currency. But it’s complicated to know if these will be possible in the future. We will explain why in this article.
Anything can be referred to as money provided the receiver and sender have reached an agreement. This explains how the trade by barter system operated many years ago. People would get salt in exchange for sugar. The system stopped when people realized that everything cannot be grown in the same amount; thereby making some goods have more value than others.
The paper currency has introduced some form of stability and has brought value to different products and services. Some people believe that paper currency may lose its value like the previous currencies we had. They pointed at the centralization of paper currencies as the major reason for their concern. The centralization of paper currency gives governments and financial institutions authority over the sweat of people.
The possibility of this happening cannot be ruled out. Just as we know it, money has evolved over the years. The paper currency got popular in the seventeenth century. However, lots of challenges can hinder Bitcoin and other cryptocurrencies from replacing dollar and other paper currencies.
Acceptance as a store of value and not currency
Many governments of different countries may not consider cryptocurrency as a means of making payments. Lots of them have already banned and restricted cryptocurrency, thereby limiting the ability of people to trade using cryptocurrencies.
An example is the Nigerian government. Recently, the Nigerian government banned the use of Bitcoin and cryptocurrencies as a mode of payment. No bank in the country allows transactions involving cryptocurrency.
The economy of every country is built on the control the government has on its currency. This empowers the government to decide the amount of money that should be printed to respond to external and internal pressures. If cryptocurrencies replace paper currency, this power will be taken away from the government. For instance, since Bitcoin has a cap of 21 million, it implies that only 21 million Bitcoins exist in the world and more cannot be minted, even if the need arises.
The co-existence of the two currencies is more practical
It appears difficult for Bitcoin to completely replace the dollar and other paper currencies. The co-existence of both currencies (cryptocurrency and paper money) is more practical. That is why regulations are more important. Cryptocurrencies are now vulnerable to tweets or reactions from major investors, observers, players, stakeholders, and government decisions. For instance, we all saw what happened to the value of Bitcoin with a single tweet from Elon Musk. Therefore, a regulatory network is required to protect it from all these vulnerabilities.
Also, there are many cryptocurrencies in the market, however, only a few of them (such as Bitcoin and Ethereum) can be considered as serious ones. Others like Dogecoin and Shiba Inu do not offer the same level of confidence. So that means as time goes on, someone will need to decide the acceptable cryptocurrencies in the system.
No doubt, cryptocurrency is the future. The chance of physical wallets going extinct by the end of this decade is high, and we will have to store our money on smartphones. However, that money won’t be just crypto. Some governments are currently trying to create their own digital money.
So, back to what the future of cryptocurrency looks like; It’s safe to say that Bitcoin, Ethereum, and other cryptocurrencies are most likely to remain parts of our lives in the future just as we have money, commodities, investment options, and assets.
