The advent of digital currency is inevitable. Just like currency transitioned from shells and ingots to coins and then from coins to paper money, it will transition into a digital form. It is just natural progression.
Will this digital currency of the future be "crypto" currency?
Crypto currency only means encrypted currency and security being a prime concern for any form of currency, yes, digital currency of the future will have to be secure and therefore "crypto".
Will bitcoin be the digital crypto currency of the future?
Now, the question becomes more complicated. There are lots of factors on both sides of the scale.
Those in favour of bitcoin:
- Market capitalization: With a market cap of over 130 billion ($), bitcoin is bigger than the national currencies of several nations and by far the leader amongst crypto currencies. For whatever reasons, bitcoin is immensely popular and it has got this momentum going in its favour. Market adoption is a much required parameter for the currency of the future and one that only market history can predict and bitcoin definitely seems to be doing well there
- Form: Blockchain is a revolutionary technology that will reshape the future. Being in this form enables bitcoin (and most other crypto currencies) to be decentralized and secure. This is also a huge advantage for bitcoin.
While there are such strong positive factors, there are some equally if not more impactful problems that bitcoin has to address:
- Adaptability: Technology, especially a new one like blockchain, evolves rapidly. Any strong application built on it must therefore be capable of keeping up with this growth. Bitcoin and several other crypto currencies do this using "forking". This is essentially a method for adopting a change in the digital framework enabling the currency. Like seen in recent news, these forking events have caused a lot of ruckus because of their implications to current users. To be truly adaptable, bitcoin has to be able to make these changes (forks) without causing any impact on current holdings and transactions which it is currently not. For an analogy, it has to be as facile as upgrading the android version of a phone without affecting any of its data.
- Transactional volume capacity: The amount of transactions that bitcoin can facilitate in a short period of time is still beyond par compared to popular currencies. While recent and proposed changes are bringing progress in this area, it is still a work in progress. But since a lot of work is going into this already, I believe, this is a hurdle it can cross.
- Transaction time: Digital is synonymous with speed. For the currency of the future, bitcoin and most of the other crypto currencies are pretty slow. Sometimes it takes even hours for a transaction to be completed (confirmed). This is definitely the biggest problem I see for bitcoin. Unfortunately, this comes as part of the blockchain package that has so many benefits. I believe the answer to this problem is that in the future, blockchains will become "blockless". It will be possible to add transactions individually rather than wait around for a block of them to occur.
Currently, transactions are authorized by miners who are incentivized to do so, by rewards. In a blockless framework authorization should be possible individually and may be performed by a central authority. Although this goes against the decentralized nature of blockchain, for adoption by any government body, an amount of centralized control will be mandated by them. Currency being the pillar stone of access by which governments control the economy, I don't see any government giving up its control over it. Be it for good or for bad, that is the truth. Also, transactions will become delocalised in time on the blockchain. This point is too technical to get into here.
The "blockless" and "delocalised" nature of the future crypto currency will solve most of the current problems and if these solutions are generated and made easily adoptable by bitcoin, I see no reason why it cannot become the future of currency ("real"). But if it's up to me, I'd still hold my bet.
Bitcoin was initially built to facilitate transactions, but has transformed into a strong value store over time, due to its huge price gains. We'll see how that evolves, but for now, due to the volatility and high network fees, it will be used more for value than for purchase. The whole crypto market will experience this trend, as coins continue to appreciate and their immediate value release is less than the expected return over time. To that point, many of them resemble securities more than they resemble coins. SEC has noticed that and is moving into the space to regulate.
Hi Kishor - Bitcoin the technology is real, as is any blockchain-based ledger. Bitcoin as "currency", I'm not so sure. It appears to be traded like a stock (or possibly a finite commodity) and I believe that's the correct filter through which it should be viewed. At least for the time being.
To me Bitcoin is real as I can use it for several transaction and it could be considered as an asset too. Ok probably I could not use it just to buy a coffee, however Bitcoin is well accepted in other situations. Current issues are that it works without a central repository or a single administrator, there is no specific legislation (e.g. Europe) and is still illigal in some countries.
This is primarlily social and political issue. Cryptocurrencies, including Bitcoin, are as real as any store of value, albeit volatile and not yet fully mature in their application. And, regardless of what Jamie Dimon says, bitcoin or some derivation of it will eventually replace fiat currency. The reason being it can not be blocked or controlled by central banks or large commercial entities, which can not compete with it (as much as they would love to kill it off).
All money as store of value is fictional since the abandonement of the gold standard. In the current paradigm, its value is manipulated by large banks and central governments. Before the invention of cryptocurrency, markets had had no choice but accept this monopoly.
Markets follow self interest and could care less what bureaucrats and bankers think about it. This is the basic principle of true capitalism, not to be confused with monopolization of resources and influence that are often being peddled as free markets.
No matter what your or my politics are, technology is disrupting these controls and markets will eventually settle on what works.
In the short view, Bitcoin's survival is probably most dependent on its acceptance as a form of payment in the marketplace. If Amazon starts accepting it, for example, I would bet my money on it.
There will be a bubble, but without the bank run. Late comers will take a large haircut and that might be the extent of the damage, IMHO. Nothing like the Great Depression bank runs.
I am no economist, but cryptocurrency actually seems a safer alternative to the fractional banking systems we are having today because it renders the middleman (trusted 3rd party) obsolete, so there is no one to manipulate the markets other than true demand and supply, which is always self-correcting when not interfered with.
It depends what you mean by "real" - Most people assume the $ in their bank account is "real" but it is not - there are more $'s in bank accounts than there are physical $!
So, is bitcoin real could be - can you use it to transact? You certainly can and in many countries this is happening at a fast rate (especially Japan and S Korea)
I can buy my lunch with Bitcoin in London and use it to transact online...that would make Bitcoin "real" to me
With Crypto ATMs and Trading Funds on the way, and innumerable ICOs addressing multiple real life transactional scenarios,
Can you recommend adding bitcoin/cryptocurrency to personal investment portfolio? If so, do you have a recommendation of % of allocation for a beginner in crypto investments?
Bitcoin just ramp up to 10K and was accepted eveywhere during the last Black Friday, bubble or not this is the reality now. Even the Bitcoin Black Friday was set up since 2012, http://bitcoinblackfriday.com/browse.
In the 24 hours following the Cyber Monday online shopping extravaganza, trading volume of Bitcoin surpassed the $5 billion mark.
11 arrested in Icelandic bitcoin heist March 5, 2018
Police in Iceland say they have cracked the case of the largest series of thefts ever in the country — and it's over bitcoin. Nearly 600 computers used to mine cryptocurrencies have been stolen from data centers in Iceland in four burglaries, the AP reported. A security guard and 10 others were arrested, although the stolen computers worth almost $2 million have not been found. Police are monitoring electric consumption with the hopes of finding unusually high energy usage, a clue that could lead to an illegal bitcoin mine.
This Is What Happens When Bitcoin Miners Take Over Your Town
Eastern Washington had cheap power and tons of space. Then the suitcases of cash started arriving.
Bitcoin is the name of the most seasoned and most prominent digital money network and also the unit of currency created by a similar network. But the way that it is virtual (i.e. you can’t touch it as there is no physical frame) and decentralized, bitcoin act particularly like any genuine money you know.
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