This article is written by Pini Raviv, a software engineer and front-end team leader for an Israel-based startup. A Bitcoin aficionado spends his time researching altcoins, mining Ethrereum and blogging about blockchain.
Bitcoin price has continued to rise despite not being expressly recognized and adopted by governments and major global institutions yet.
The growth which is evident in terms of volume and market capitalization is mainly motivated by the improved ease of interchanging the cryptocurrency with fiat and vice versa.
The ease of interaction between Bitcoin and fiat
The transition between cryptocurrencies and fiat remain an essential part of blockchain development. Services offered by blockchain-enabled gateways are taking credit for contributing significantly towards the development of Bitcoin and blockchain as a whole.
The two major applications of Bitcoin by users are:
Over the years, investing in Bitcoin has proven to be a profitable venture. The overall increase in the price of the cryptocurrency despite intermediary drawbacks justifies the actions of users who see the entity as a store of value.
Digital currencies are excellent in storing value and providing a decentralized investment platform. Consumers can buy and sell cryptocurrencies simply and quickly using exchanges. Unlike stocks or equities, cryptocurrencies are decentralized, simple, and user-friendly. The ‘store of value’ model for Bitcoin and others will continue to be a great use.
However, mainstream consumers are still wanting the benefits that traditional banking affords. Customer service, client rewards, and fast transaction times are all areas where banking has been far more successful than cryptocurrencies. However, new models, like Empire Card’s Bitcoin debit card, are creating new ways to bridge the gap between cryptocurrency and banking benefits.
As CEO Patricia Harrison recently said:
We are proud to finally have brought a solution that combines the best aspect of the traditional banking model with the benefits that digital currencies can afford.
By combining traditional banking benefits like rewards and client services with the power and flexibility of cryptocurrencies, companies are beginning to find ways to bring cryptocurrencies into the mainstream.
Michael Vogel, CEO of Netcoins defines Bitcoin as a truly re-defining “currency” in a way the world has never seen before. Some of the attributes of Bitcoin that enable it to function as a currency are divisibility and fungibility.
Bitcoin can be divided into smaller units. This attribute makes it easy for the cryptocurrency to be used as a means of transaction. Also, the fact that units of Bitcoin can be interchanged qualifies it as a genuine currency. However, one aspect of Bitcoin that has so far discouraged its total application by the public as a currency, especially by merchants is price volatility.
Vogel describes the present volatility of Bitcoin price as part of an aggressive growth phase. According to him, some of this volatility is by design, since fixing the total number of coins encourages investors and speculators to bring liquidity and grow the user-base.
Vogel also notes that the stability of price should not be such an important concern when considering Bitcoin as a currency.
Many would argue that price stability should be a requirement for Bitcoin to function as a genuine currency. However, if Bitcoin evolves to become the preferred backbone for global payments and remittances, then the price of Bitcoin really doesn’t matter (because it can function as a transaction medium behind the scenes).
Vogel concludes by noting that the next phase of Bitcoin will see more applications that make it easier to use and store Bitcoin. Today anyone can already send, spend, and get paid in Bitcoin, which already makes Bitcoin a genuine currency. Making these functions easier and safer to perform will continue to cement Bitcoin as a viable currency.
Featured image from Shutterstock.
Last modified: May 21, 2020 9:36 AM UTC