Cryptocurrency is seen by some as the “money of the future”. El Salvador is the first country to adopt Bitcoin as part of their economy. This means that since 2021 businesses in El Salvador must accept Bitcoin alongside their local currency. El Salvador is still the only country where they accept Bitcoin throughout the whole country, will this happen across the whole world?
Let me first talk about why people think this will happen. Cryptocurrencies are decentralized, so it is not controlled by governments and banks. Looking at the increase over the last few years of people not trusting the government, it makes sense that cryptocurrencies will be the more favorable among people. Crypto also has the benefits of being quicker and it doesn’t deal with borders, in the sense that they don’t relay on banks or intermediaries. Supporters will also say that the limited supply of 21 million Bitcoins will protect the currency against inflation. The government is not able to print more of it.
On the opposite side the volatility is a big thing, the price of a Bitcoin changes too much for daily use. Also governments who decides whether they want to implement Bitcoin, don’t want to lose control over monetary systems. Also it is still not as simple and straightforward as paying with card right now. However are these main problems, that opposites come with, not just outcomes of the Cryptocurrency not being implemented and accepted yet?
I think what is going to happen that Crypto would be coexisting with today’s money, It would not fully replace it. I am also quite skeptical about the whole concept of the Digital Coins in general, because it is already a hype for such a long time and so many resources are put into it, but still it haven’t shown me real life changing advantages that will overthrow today’s money. But I am curious about the results over time of El Salvador and even hoping that in the future they will take a new step into exclusively having crypto as a payment method. In conclusion, I think it will act more like Digital Gold than an everyday payment method.
I think you are spot on in this article. The duration of the bitcoin discussion kind of proves that it is not going away anytime soon. I always find it funny how skeptical people are but that the reality often proves them (partially) wrong. However, I do think bitcoin is too volatile and coplex to completely replace traditional money. But I do think that it can be used as a form of ‘digital gold’. In addition, I am convinced that the blockchain technology is going to be used in other industries or segments and I am interested in seeing the future potential of these concepts.
I agree with what you are saying about people who believe that Bitcoin will take over instant payments, especially given the rise in digitalization. Many people are losing trust in governments, which also makes them hesitant in making bank transactions, but most of the time, these people also believe in conspiracy theories. Since cryptocurrency is not connected to banks or other intermediaries, some people may feel more trust. Still, I’m not sure whether people would actually use Bitcoin for everyday payments, as its value has been fluctuating a lot recently, and it would be difficult for businesses to constantly adjust prices based on these changes.
Interesting topic, especially in these times when the US and EU are pushing for the implementation of digital currency. The Trump administration designed a new law that all stablecoins, the “neutral” currencies, like USDT, need to cover their coins with government bonds/debt. This creates a win-win scenario for the US government by increasing demand for their national debt and the stablecoins, which gain legitimacy by being regulated and backed by US debt. This, in my opinion, will be a big turning point in the crypto space, since for the first time in history, the incentives of the crypto market and the US government are aligned.
The blog is clear, engaging, and the El Salvador vignette helps understanding the pros and cons. However, I think that Bitcoin can’t be a valid currency nor a reserve like gold because it has no physical anchor. If collective belief in the crypto and blockchain system fades, a bitcoin is nothing; a gold bar still sits in your hand, meltable, usable, sellable. That difference matters when the world is on fire. Furthermore, I agree that extreme price swings kill “money” use, custody is brittle, rails depend on regulated on/off-ramps governments can pinch, mining costs don’t create intrinsic value and holdings are concentrated. Make this tangible: “When trust breaks, what’s left?” With gold, something. With Bitcoin, only a ledger entry.
I agree with your point that Bitcoin is unlikely to fully replace traditional money. The volatility and lack of government control make it hard to see it becoming a mainstream payment method. Instead, I think we’ll see more emphasis on central bank digital currencies (CBDCs), since they give governments the ability to modernize payments while still maintaining stability and oversight. Bitcoin may continue to act as a kind of ‘digital gold’ or store of value, but CBDCs are more likely to shape the future of everyday transactions.