Over the last decade, cryptocurrencies have come a long way. The user base has grown substantially, the market is blossoming with fruitful colors, and the ecosystem is just getting better. Considering how far they’ve come, Cryptocurrencies are undoubtedly posing a risk to conventional financial institutions. The industry is worth over $700 billion, with $200 billion being traded every day.
Cryptocurrencies today are at the forefront of finance, with digital currencies such as Bitcoin and Ethereum doing exceptionally well. Investors, traders, and users have become enamored with cryptocurrencies over the decade. The leading cause of success behind it is its nascency and decentralized nature. Cryptocurrencies are relatively very new compared to traditional assets. So, they need proper time for growth and development, which raises the question if Cryptocurrencies could possibly become the widely accepted currency in the world. In this article, we’ll be discussing just that.
The status of Cryptocurrencies
Bitcoin continues to reign supreme after being introduced more than a decade ago as the first cryptocurrency market. Despite its unflattering crashes over the years, predictions of the asset hitting $1 million in value seem too far off from reality for some experts. Experts argue that the U.S. Dollar has deeply rooted itself as the world’s premier settlement currency and cryptocurrencies have yet to be universally accepted, let alone replace the U.S. Dollar. However, it may seem inevitable.
The Dollar’s deterring influence
Experts like to argue that the Dollar’s influence is prone to die when the United States’ ability to pay debts deters. Experts believe that Bitcoin is gaining mainstream acceptance heading into the new year. While most Bitcoins may be held on to as valuable investments, Businesses and organizations are adopting the currency as a payment method. Moreover, businesses and organizations are actively utilizing cryptocurrencies for international trade, especially for underdeveloped countries.
Bitcoin replacing the dollar may seem more real after larger payment companies such as Paypal, Mastercard, Visa, and Venmo are planning to allow millions of merchants to accept Bitcoin in 2021.
Additionally, many people are heavily investing in Bitcoins based on fears and speculations that central banks led by the US Federal Reserve are depreciating their currencies’ value. Contrarily, In the effect of wide-spread fear, bitcoin’s price has quadrupled since March, valuing the asset at $29,062 today.
The U.S’s debt to the world has well surpassed 50% of its economic output last year, projecting the birth of yet another crisis according to the International Monetary Fund. Currently, the U.S’s debt has spiked to almost 70% of its economic output, giving more room for Bitcoin and cryptocurrencies to process its goal to replace the dollar as a medium of exchange.
So, what’s keeping Bitcoins from reigning supreme over the world. Well, of all the barriers that contain Bitcoin’s far cry is its notorious volatility. Data suggests that over half of cryptocurrency investors believe that the asset’s volatility is the core reason why it hasn’t replaced currencies around the world yet.
The asset’s volatility also plays a vital role in the adoption of cryptocurrencies for everyday transactions. Bitcoin has gone up over 20% in the last seven days, followed by Ethereum going up %18. Coherently, XRP has gone down a whopping 40% this week.
It is not surprising how cryptocurrencies are not yet adopted as the primary medium of exchange, considering how dramatically the values can shift. Transferring bitcoin can take hours, and because of its high volatility, the value can change dramatically during that time! Bitcoin’s value has gone up 4% in just the last few hours, so it only seems unfeasible to use the asset as the primary medium of exchange.
The solution lies in time. Speeding up transactions can drastically increase the chances of cryptocurrencies being widely accepted. Many projects are actively working on this issue, such as Dash, Stellar, Cardano, Litecoin, and more.
What if Bitcoin replaced the Dollar?
Global adoption of Bitcoin could cause the mother of all financial crises, according to Experts. Experts suggest that Bitcoin replacing the dollar could destabilize conventional markets as well as crypto markets. Experts argue that the quantitative easing of Bitcoin will nearly trigger untamable hyperinflation of various currencies worldwide. Experts add that there is enough data to prove the effect of quantitative easing over price inflation worldwide.
While Bitcoin may have both the advantages of gold and the convenience of being a digital asset, it is entirely decentralized. Unlike gold, its volume is predictable and permanently fixed. Moreover, Bitcoin can be divided into tiny amounts, making it far more adaptable than gold as a medium of exchange. Additionally, as its value increases, the prices of the goods and services it can buy will eventually fall.
However, hyper-inflation will still be a huge issue, according to Experts. Experts add that the hyper-inflation will be followed by a social, political, and economic collapse if Bitcoin and cryptocurrencies were to replace fiat currencies. This is because Bitcoin’s journey to the top is dependent on the Dollar’s collapse. The failure of the U.S. dollar may cause economic unrest and international chaos.
Bitcoin, being accepted as the premier currency, has many different theories and conspiracies tied to it. No one can tell what will happen if it were to be adopted as the exclusive currency around the world. The opinion is divided on a vast spectrum; some experts believe that it could bring about economic unrest while others believe that it could solve many of the problems traditional finance poses to the world. One thing is for sure that reality may not seem too far from unfolding. What do you think?