Whether or not the Bitcoin will emerge as a future currency remains to be seen. It had entered the economical landscape as an alternative to traditional currencies when people had begun to lose faith in the existing banking system. Besides, it was hoped that Bitcoins will succeed in eliminating the problem of inflation that plagued fiat currencies.
Bitcoin, because of its decentralized nature, offered an opportunity to snatch power from the hands of traditional financial bodies to guarantee faster and better services to people, and it was expected that people would be impressed by it. Moreover, the very fact that the Bitcoin would facilitate cross-border transactions seamlessly allowed people to view it as a possible global currency. The automated platforms like www.bitcointrader.site are making bitcoin a very convenient digital currency to trade 24/7 giving rise to its usage.
While there have been critics who have argued that the Bitcoin bubble will burst shortly, these predictions have not come true entirely. In spite of frequent price rise and falls, Bitcoin continues to feature as a permanent player in the global financial space. It may not be held as generally-accepted currency yet since most of the payments and transactions conducted daily continue to use traditional mediums. Bitcoin’s dollar price continues to be a key metric and this shows that its value is largely speculative. Since prices of this coin are extremely volatile, most Bitcoin owners are not keen to hold onto them for a very long time. At the same time, there are some Bitcoin hopefuls who feel that the prices will rise inevitably over the years and wish to hold onto their assets for the long term.
So, whether or not Bitcoin can evolve into a currency of the future depends on both these views. According to fundamental financial theories, you can get high returns from high volatility. So, both the dollar and Bitcoin can prove to be good investments provided the economy is dysfunctional. If the Bitcoin or any other crypto coin was to become a future currency and replace fiat currencies, it will indicate huge policy implications. If the Bitcoins were to become real money they would start to interfere with the bank’s power to control the economy and prices.
One of the predictions is that the Bitcoins will ultimately settle into low-volatility equilibrium to become an acceptable payment method. According to this theory, Bitcoins will compete against other crypto assets and gold. Another more likely prediction is that Bitcoin was originally started to solve the problem of trust and avoid double spending. Its job is to verify that a person has the money to make a payment. But to become a currency it should be inflationary.
According to Koeppl and Chiu who suggest this, rewards for miners are being reduced over time and Bitcoin’s supply is limited. So, miners will need to be rewarded eventually with transaction fees rather than Bitcoins, and this not a good idea. To make these fees worth a miner’s efforts they have to be very high. This in turn will deter people from doing Bitcoin transactions. When miners get paid with inflation, costs are spread across all people who own Bitcoins. So, these theorists are in favor of making Bitcoins inflationary like the dollar. When there is inflation like real currency, people would be keener to use Bitcoins instead of hoarding them. With speculations coming down, currency value will also become stable.