Bitcoin has failed, will there be another currency that succeeds?
Bitcoin’s 11th birthday – on the one hand, the total value of Bitcoin reached $ 119 billion, on the other hand – it is used mainly for investments/speculation and not for the main purpose – means of payment
Without us noticing, the cryptocurrency market is no longer really a kid. This coming January, the first cryptocurrency, Bitcoin, will celebrate its 11th birthday. This is a good time to make a brief interim summary.
When the Bitcoin system started operating, somewhere in January 2009, it was very unclear that it was going to succeed, because Bitcoin was trying to do something that no one had been able to do before: produce a currency that would fit the world of the Internet. As a currency born for the Internet, Bitcoin had some unique features. First, it was a community currency. Second, it was a decentralized currency – Bitcoin does not have a central bank that is responsible for printing the money, and/or monitoring the price.
Third, Bitcoin has proposed a mechanism that circumvents the need for banks, or any other central body to make transactions, and allows people to make transactions from anywhere, anytime, and provided they are connected to the network. In this Bitcoin offered a revolutionary idea: for thousands of years, money was something that had value because it was printed from metals that had value in themselves. No one asked why people were willing to give products in exchange for a coin made of gold or silver. All that had to be done to check that the currency had a value was to check the quality and weight of the metal.
In the last hundred years, people have been getting used to using money made of paper. There are quite a few places where people are not quite used to it yet, but in most of the world, people are still willing to shop with papers because they believe there is a country behind these papers.
There is no one behind Bitcoin, just the belief that as long as the Internet works, Bitcoin will keep moving. Still, there are currently over 25 million people in the world who use Bitcoin wallets on a regular basis, and the market value of Bitcoin is about $ 119 billion. These are not huge numbers in relation to the amount of money that exists in the world, but still, these are respectable numbers for a property that until 11 years ago, no one thought such a thing could even exist.
But looking ahead, it’s a little less clear what role Bitcoin is going to play in the global financial system. On the one hand, the technology he proposed, the blockchain, is being implemented within a great many systems, and there are already quite a few central banks examining the possibility of offering currency based on this technology.
Bitcoin is also used as an asset that can be an investment opportunity for those who are willing to invest in an asset with very high volatility – those who bought one bitcoin at the beginning of the year, for example, made a return of almost 80%. On the other hand, the possibility of high profit also brings with it high risk. Those who bought the same bitcoin about six months ago have meanwhile lost almost 30%. So it is not an asset that suits everyone.
But in the central role assigned to it, that of means of payment, Bitcoin is failing to rise. The number and volume of transactions made in Bitcoin have not changed significantly since 2016. The number of stores willing to accept Bitcoin as a means of payment has also not changed significantly in recent years. More than that: when Bitcoin went live, it was a real alternative to the accepted means of payment. It was cheaper and faster to pay with Bitcoin than with credit cards, for example. But banks and credit card companies realized the risk that Bitcoin posed to them, and made their means of payment just as quick and cheap. So the simple person on the street simply has no reason to actually use Bitcoin to make his transactions.
And when that is the case, it does not look like Bitcoin is going to become the currency of the future. Because to become the currency of the future, it must become much more popular, and it must have a much higher market value. But on the other hand, Bitcoin has proven that a currency behind which no one can become existent. And that leaves the question open, whether, and when another currency will emerge that will be even more successful.