Bitcoin – the cryptocurrency that makes headlines almost every day. First, news about its meteoric rise in value was there in every nook and corner of each and every news daily. Thereafter, the news about its drastic plunge in value made headlines. It is getting, increasingly, difficult to predict the future of the trending cryptocurrency keeping in view its volatility.
Bitcoin came up in 2009 and since then its popularity is on the rise. Being the first decentralized digital currency, it instantly turned heads as persons transacting in bitcoin needn’t reveal their personal or private information and neither there was a central authority controlling it. With the introduction of ‘Bitcoin,’ the other technology which made its debut was ‘Blockchain’ which is a public ledger in which record of every transaction made through bitcoins is preserved.
Now, if we take into account the overall performance, Bitcoin is the most popular of all other cryptocurrencies and if we talk about 100 best cryptocurrencies then Bitcoin, in spite of the ups and downs it had, undoubtedly holds one of the top spots.
Paper Money & Coins Are Going Obsolete
In reality, paper money and coins are largely been replaced by digital methods of transaction. More and more people are in the possession of debit cards, credit cards, digital wallets as they are quite comfortable to carry and convenient to use rather than carrying a pile of currency notes or heap of coins. The fact that makes people interested in Bitcoins is the lack of a central authority controlling it, anonymity and usage across international borders. Transactions settled in Bitcoins needn’t pass through an intermediary like banks.
Bitcoin Being Used As a Vault Storing Financial Value
As of now, not many transactions are done in Bitcoins as only about 1% of the world’s population is using it. Out of this 1%, the majority of the persons are storing Bitcoins as a vault storing some financial value rather than a mode of making payments.
Overall, a large amount of money is stored in the form of bitcoins. But, the volatility associated with keeping bitcoins as a financial storage is keeping people away from using it. We can’t predict as to what will be the value of bitcoin when we wake up the next day.
Transactions Speed Associated with Bitcoin
Another reason for which Bitcoin is receiving a lot of flak from cryptocurrency users is the slow transaction speed. As the number of transactions is increasing the speed associated with the full and final settlement of the transaction is decreasing.
This is the area where Bitcoin needs to improve if it wants to gain a potential stronghold over money flows in the economy in the near future. Consequently, two solutions to this problem were proposed; Bitcoin Cash and Segwit2x. Both the solutions plan to make certain alterations in the blockchain. For example, Bitcoin Cash increases the size of each block from 1 MB to 8 MB while on the other hand, Segwit2x aims to transfer a considerable amount of data on to a parallel chain and eventually doubling the block size to 2 MB.
Increase in the Number of Merchants Accepting Bitcoin
Bitcoin, due to its popularity, in recent years, has made several retailers and merchants to accept it as a mode of payment. As of now, Bitcoin, as a mode of payment, is being accepted by big names like Subway, Xbox, Reddit and even McDonalds.
If Bitcoin has to become a mode of payment for more retailers and merchants then, definitely, it requires involving a significant percentage of world’s population in its usage. If more people use and recommend merchants to build up the infrastructure required for accepting payments through Bitcoin, then only more businesses will involve themselves in investing in the needed technology for accepting Bitcoins as a payment channel.
As of now, there is no consumer demand for acknowledging Bitcoin as a payment channel. Even the retailers and the merchants who are accepting Bitcoins in exchange of their products or services are largely doing so in order to rack up some of the PR value and not because it has some associated gains for them or for the consumer.
Persons who are using bitcoins, an extremely small percentage as compared to the world’s population, don’t want to spend their bitcoins in exchange of some products or services as the value of bitcoin is highly unpredictable and unreliable.
Hence, reiterating the statements said in above sections that there is no demand from consumers on merchants for accepting payments via Bitcoin and whoever is holding Bitcoin, is largely holding it as a storage product of a relative financial value.
So is Bitcoins the future of payments? The answer to this question can’t be said in a simple ‘Yes’ or ‘No’ but seeing the current trends and the volume of transactions done in Bitcoins, it can be safely said that cryptocurrencies do have a long and favorable future.
As more and more Initial Coin Offerings (ICOs) are coming up we don’t know and neither can we say how the banks will involve themselves in cryptocurrencies, how the transfer from current payment systems will happen and how the cryptocurrency strategies will be laid down.
Since the usage of Bitcoins completely removes and eliminates the need of middlemen in full and final settlement of the transactions the middlemen will, definitely, try to evolve themselves and offer services in a much better way.
But the real opportunity lies in ‘Co-existence’. With the implementation of bitcoins as a mode of payment on a considerably large scale, it will definitely reduce the amount of pressure that is there on the existing payment channels thereby improving their services. Plus, it is not the case that bitcoins will completely rule the money flow and other payment channels will become obsolete. Bitcoins will just add to the existing modes of making payments. The idea is that everyone should be free to choose their own favorable mode of payment. As of now, it is still a long way to go so let’s wait and watch.