Why won't Bitcoin ever become the world's universal currency?

Sid Venkat

Sid Venkat, studies Physics at University of Illinois at Urbana-Champaign (2019)

Répondu il y a 47w

To answer the question we need to first separate it into two parts: (1) Why won’t we have a universal world currency and (2) Why Bitcoin won’t become the world’s universal currency.

Why we won’t have a Universal World Currency (or at least anytime soon)

The concept of currency is relatively new to us Homo Sapiens. Primitive currencies in the form of shells, gems & gold coins have been used for thousands of years in ancient Roman and Egyptian marketplaces, but seem prehistoric when compared to the vast currency systems that operate today.

Modern currencies such as the USD, the Yen, the Pound, the Euro, etc. are more than just a store of value and a medium of exchange, they are an extended representation of the respective countries economic environment. Developed nations have powerful central banks that use monetary policy to affect their currency’s value for the benefit of that nation. Currency’s are customized tools to participate in customized economies.

Therefore currencies are incredibly useful, but are inherently designed to be suited for an isolated environment - their respective country. Understandably with rapid levels of globalization and the prevalence of the petro-dollar, our global economy is more interconnected & interdependent than ever. But on net, currencies are most effectively used within their own borders. The world economy is still too dynamic and isn't ready for a universal currency.

Consider the most modern attempt at grouping countries of similar economic and geographical conditions under the umbrella of a single currency - the European Union and the Euro. There have been many benefits to the Euro, but it has led to economic problems such as the European Debt Crisis that disproportionately impact some more than others. You have Germany and France, booming economically and are financially stable, but on the other hand there’s Greece, Spain and many more who are struggling to repay large national debts and meet other financial expectations. The economies of Greece & Germany are substantially different, but are forced to operate under the same monetary system. Can you imagine an economic system in which China, Zimbabwe, the UK and the US use the same currency? I can’t. At least not yet.

Thus from an economic perspective, the world is far from ready to have a universal world currency, but thanks to globalization we are moving in the right direction. However, economic forces aren’t the only force that matters here, sociopolitical forces (you know where this is going) have a huge saying in this as well.

I don’t need to go into detail and bore you about how nationalistic/populistic views have become widespread around the world - the media does enough of that. Yet, we can’t ignore the influence it will have on our monetary system. Global borders have to disappear and the economies & cultures of the world have to become more homogenous to accept a world currency - we’re far from that.

It’s going to take hundreds if not thousands of years for our world to overcome Economic and Sociopolitical barriers and be prepared to operate under a Universal World Currency.

Why even if we do have a Universal World Currency, it won’t be Bitcoin

Before going on to bash on Bitcoin’s limitations, I want to begin by saying Bitcoin is a revolutionary invention that is going to change the world like never seen before. The limitations don’t take away from Bitcoin’s brilliance, they only prevent it from becoming a universal world currency.

Bitcoin has a variety of scaling challenges that make it difficult for it to embody a successful world currency.

A hard cap coded into Bitcoin limits the total amount of Bitcoin that will ever exist to 21 million. Sure that means Bitcoin is protected against damaging levels of inflation, in fact its deflationary, but that means once we reach that hard cap (which is expected to happen around the year 2140) as demand continues and supply remains permanently constant the price of Bitcoin is going to skyrocket. Thus the price may soon be out of reach of the regular public as it becomes too expensive to acquire and participate in. For it to be a truly universal world currency, Bitcoin has to be accessible to anyone who wants to participate in the market.

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There is a solution that overcomes this issue: divisibility. Bitcoin is divisible up to 0.00000001 BTC - thats one hundred millionth of a Bitcoin. So even if the price of a single Bitcoin is beyond affordable, people can still interact and participate in the market with partial bitcoins. But can you instantly tell the difference between .00000001 BTC and .0000001 BTC? Can you imagine the number of mistakes that would arise because they're simply one or two decimal points off? As the price of Bitcoin rises, a simple decimal error could be worth a LOT of value. It isn't a feasible and easily usable currency if most people are exchanging value in the decimal points.

Another huge issue is the cost of running Bitcoin’s blockchain network. Currently a single Bitcoin transaction requires the same amount of energy that is used to power your house - for a week. Thats an absurd amount of electricity for just a single transaction. If the Bitcoin networks needs to handle transactions at the number and size the world economy requires of it, the electricity costs are going to be unbelievably high and impractical to support. The Bitcoin network can’t currently handle transactions from the billions of people participating in the global market.

The final issue barring Bitcoin’s ability to become a Universal World Currency is the issue of transaction costs. Currently, the average Bitcoin transaction has a fee of $7. That’s insane. The huge financial institutions and networks that support transactions at most charge a couple cents or a small percentage of the overall transaction. Wasn’t the point of Bitcoin to eliminate those centralized institutions and their accompanying disadvantages? Charging so much for each transaction leads to situations in which the costs outweigh the benefits, making Bitcoin unsuitable for many transactions. Furthermore, Bitcoin miners are awarded with Bitcoin for supporting the network. But once we reach the hard cap what is the incentive for miners to use their computational resources if they no longer earn Bitcoin? Their income is going to be solely derived from transaction costs, thus transaction costs are likely to increase as its the only avenue of income for those supporting the Bitcoin network.

All these issues together make it highly unlikely for Bitcoin to become the World’s Universal Currency.

That doesn’t mean a cryptocurrency will never become universal world currency.

Bitcoin may not become a universal world currency, but I can une garantie you that a cryptocurrency and not a central government based fiat currency will become a universal world currency. The technological advancements brought by Bitcoin and the innovation in the crypto/blockchain field is still in its early years but is laying out the foundation for groundbreaking discoveries to occur in the future.

Brian Schuster

Brian Schuster, Architecte de solution et développeur

Répondu il y a 48w · L'auteur dispose de réponses 1.4k et de vues de réponses 6.1m

Why won't Bitcoin ever become the world's universal currency?

Bitcoin is unlikely to become the world’s universal cryptocurrency because it’s found another use case: the world’s universal store of value.

In order to be a good currency, there are certain properties that need to be met, including:

(-) Scarcity: final number of the symbols

(-) Fungibility: all symbols are interchangeable, commodity like. Symbol A is identical to symbol B, and vice versa.

(-) Divisibility: the symbols are easily divisible, so you can divide them to smaller and smaller portions

(-) Durability: the symbols can survive the test of time and weahther and won’t be worn out or disappear

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(-) Transferability: the symbols can be easily transferred between owners

Source for this can be found here. Bitcoin is doing quite a good job at a few of these principles, including Scarcity (21 Billion Hard Cap), Divisibility (divisible to .00000001 BTC) and Durable (digital goods on the blockchain are hard to ‘erase’).

That being said, there is one place where Bitcoin is becoming less useful as a currency, that is, Bitcoin is becoming less transferable, especially compared to other cryptocurrencies. This is due largely to the skyrocketing value of the cryptocurrency market, with transactions now cost upwards of $7 a transaction and can take hours to be confirmed. This makes it very hard to use as a general use currency.

However, this does not make BTC useless. For many people, BTC is become their replacement for Gold, which is an asset for long-term holding. They see BTC’s scarcity and position in the cryptocurrency industry as good signs that the asset will rise in value. This makes it useful regardless of it’s transferability.

Suraj Bafna

Suraj Bafna, 3 années dans l'investissement professionnel et le négoce sur l'ESB

Répondu il y a 43w · L'auteur dispose de réponses 103 et de vues de réponses 134.2k

D'ABORD NOUS COMPRENDRE LE SENS DE BUBBLE

An bulle économique ou atout bulle (parfois aussi appelé spéculatif bulle, et à bulle du marché, un prix bulle, et à bulle financièremanie spéculative, ou un ballon) est le commerce d'un actif à un prix ou une fourchette de prix qui dépasse fortement la valeur intrinsèque de l'actif.

Essayons d'estimer les VALEUR INTRINSEQUE DE BITCOIN

BITCOIN offre une efficacité moyens de transfert d'argent sur Internet et est contrôlé par un RÉSEAU DÉCENTRALISÉ avec un ensemble de règles transparent, présentant ainsi un alternative à la monnaie fiduciaire contrôlée par la banque centrale.

VALEUR INTRINSÈQUE DE BITCOIN = ALTERNATIVE À FIAT MONEY COMMANDÉ PAR LA BANQUE CENTRALE

MILLIARD DE DOLLARS QUESTION?

POURQUOI AVONS-NOUS BESOIN D'UNE ALTERNATIVE À L'ARGENT FIAT CONTRÔLÉ PAR LA BANQUE CENTRALE?

D'ABORD NOUS COMPRENONS QUELQUES ASPECTS D'ARGENT

LA DÉFINITION DE L'ARGENT? QU'EST-CE QUI SE QUALIFIE EN ARGENT? QUELLES SONT LES CARACTERISTIQUES DE L'ARGENT? QUELLES SONT LES FONCTIONS DE L'ARGENT?

trois fonctions de l'argent:

Premièrement: l'argent est une réserve de valeur. Si je travaille aujourd'hui et gagne des dollars 25, je peux conserver cet argent avant de le dépenser, car il conservera sa valeur jusqu'à demain, la semaine prochaine ou même l'année prochaine. En effet, conserver de l’argent est un moyen plus efficace de stocker de la valeur que de conserver d’autres objets de valeur tels que le maïs, qui pourraient pourrir.

Deuxièmement: l'argent est une unité de compte. Vous pouvez considérer l’argent comme un critère: l’appareil que nous utilisons pour mesurer la valeur des transactions économiques. Si vous magasinez pour un nouvel ordinateur, le prix peut être indiqué en termes de t-shirts, de bicyclettes ou de maïs. Ainsi, par exemple, votre nouvel ordinateur peut vous coûter de 100 à 150 boisseaux de maïs aux prix actuels, mais vous trouveriez plus utile que le prix soit fixé en termes monétaires car il s'agit d'une mesure commune de la valeur dans l'ensemble de l'économie.

Troisièmement: l'argent est un moyen d'échange. Cela signifie que l'argent est largement accepté comme mode de paiement. Quand je vais à l'épicerie, je suis convaincu que le caissier acceptera mon paiement en argent. En fait, le papier-monnaie américain porte cette déclaration: "Cette note a cours légal pour toutes les dettes, publiques et privées". Cela signifie que le gouvernement américain protège mon droit de payer en dollars américains.

POSANT LA MÊME QUESTION, POURQUOI AVONS-NOUS BESOIN D'UNE ALTERNATIVE À L'ARGENT FIAT CONTRÔLÉ PAR LA BANQUE CENTRALE?

LE SYSTEME ACTUEL N'EST-IL PAS EFFICACE ET EFFICACE EN MAGASIN DE VALEUR?, N'EST-CE PAS UNE BONNE UNITE DE COMPTE?, N'EST-CE PAS UN BON MOYEN D'ECHANGE?

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JE PENSE QUE LE SYSTÈME MONÉTAIRE ACTUEL FAIT UN BON TRAVAIL EN RÉALISANT TOUTES LES TROIS FONCTIONS PRÉCÉDENTES EFFICACEMENT ET EFFICACEMENT.

POURQUOI UNE PERSONNE ACCEPTERait BITCOIN COMME NOUVEL ARGENT?

QUELLE VALEUR SUPPLÉMENTAIRE LA BITCOIN AJOUTE-T-ELLE QUE LA RÉPONSE EST ZÉRO, BITCOIN AJOUTE LA VALEUR SUPPLÉMENTAIRE ZÉRO ET SINCE BITCOIN AJOUTE LA VALEUR SUPPLÉMENTAIRE ZERO À SA VALEUR INTRINSIQUE = ZERO, SI OUI BITCOIN EST UN GRAND BUBBLE QUI SERA ULTIMEMENT

BITCOIN EST-IL APPUYÉ PAR LA LOI?

Est-ce que n'importe qui peut m'obliger à accepter BITCOIN en tant que paiement de mes services?

POURQUOI UNE PERSONNE EXIGERA-T-ELLE BITCOIN COMME PAIEMENT DE LEUR PRODUCTIVITÉ?

PUIS-JE GAGNER DES INTÉRÊTS SUR DES BITCOINS DÉPOSÉS À LA BANQUE?

QUE FAIRE SI IL Y A PLUS DE CRYPTOCURRENCES COMME BITCOIN?

QUE FAIRE SI TOUS DES MILLIARDS DE 7 SUR CETTE TERRE COMMENCENT À CRÉER SA PROPRE CRYPTOCORRENCE, C'EST QUOI QUI SERAIT LA VALEUR DE MON MONNAIE DE CRYPTO?

IL NE PEUT ÊTRE QUE DES DOLLARS US 1, SEULEMENT DU RUPEE INDIEN 1, DES RMB CHINOIS 1, ETC

JE NE TROUVE PAS DE RAISON, LE BITCOIN REMPLACERA LE RÉGIME ACTUEL DE FIAT

Notes de bas de page:Banque fédérale de réserve de Saint-Louis | Données économiques, taux monétaires, éducation économique

Asoh Mercy

Asoh Mercy, Travel Agent at Visiting and Travel (2001-present)

Répondu il y a 39w

Bitcoin is quite often seen as an outsider in the world of finance, simply because it’s not issued nor controlled by a bank or government. But there are several downsides to the traditional monetary system as well, which was clear for everyone to see during the recent Greece debacle. Will the future lie in traditional finance, or is Bitcoin the solution everyone has been waiting for?

Buy fake money online

Chip Smith

Chip Smith, a étudié le Blockchain Expert à la Harvard-Westlake School

Répondu il y a 48w · L'auteur dispose de réponses 476 et de vues de réponses 3.7m

It’s decentralized, and not backed by the GOVT, and BANKS.

it wont become world universal, but millenials are buying it up like hot cakes.

Plus wall st, are now interested.

No matter what you think or hear, this is NOT GOING AWAY, …

Notice how the stock market sells off, and BTC ROCKETS….. nice! +44 ��

Jorgen Harmse

Jorgen Harmse

Répondu il y a 34w · L'auteur dispose de réponses 614 et de vues de réponses 244.1k

With its current design, Bitcoin can handle only 5 transactions per second. That might be enough at the inter-bank level, but is certainly not enough for everyone to transact directly in bitcoin.

Moreover, bitcoin is even less stable that fiat money. See What is the expected behaviour of bitcoin value under an optimistic scenario with widespread adoption? Could it ever be stable enough to be a unit of account for profit & loss accounting and debt contracts?.

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