The Feasibility of Bitcoin as a Viable Currency Despite Its High Cost
Bitcoin, the most prominent cryptocurrency, poses an interesting dilemma: if its high cost makes it unaffordable for the average person, how can it ever become a viable form of currency?
Bitcoin: A Limited Digital Asset
Bitcoin's value is rooted in its limited supply. Only 21 million bitcoins will ever exist, with each Bitcoin being divisible into 100 million units called satoshis. This scarcity ensures that Bitcoin will maintain its long-term value, similar to physical assets like gold. As a result, we see a rising interest in trading Bitcoin on platforms like Binance, Primexbt, and Kraken.
One might argue that the high cost of Bitcoin excludes ordinary people. However, the key is in the divisibility. The actual cost per coin is not inherently a problem. By subdividing the coin and possibly subdividing it again, you can reach a unit that is small enough to be convenient. This makes Bitcoin accessible to individuals with smaller budgets.
The Future of Digital Sound Money
Bitcoin is not just about being a high-value asset. It represents a form of digital sound money that is global, decentralized, and censorship-resistant. As we move towards hybrid systems in the future, where gold and Bitcoin work together, Bitcoin's role as a global digital currency will continue to evolve.
Challenges for Bitcoin as a Useful Currency
While Bitcoin has great potential, it also faces significant challenges if it aims to be a useful currency:
Volatility: Bitcoin is incredibly volatile due to market speculation and macroeconomic factors. Stable currencies are necessary for everyday transactions. Speed: Transactions on the Bitcoin network can be slow, which can be a barrier to widespread adoption. Energy Consumption: Bitcoin transactions consume a significant amount of energy, raising concerns about environmental sustainability. Cost: Transactions can be expensive, which can further hinder its adoption as a payment method. Fraud and Scams: There is a large number of scams and frauds involving Bitcoin, which can deter users. No Government Guarantees: Unlike traditional currencies, there is no government backing for Bitcoin. If a bank or online wallet system fails, any held bitcoins are at risk. Limited Value Guarantee: Bitcoin does not have backing or guarantees of value, such as gold or the GDP of a country.Addressing the Cost Barrier: Buying Satoshis
While Bitcoin's price is currently prohibitive for many individuals, this does not mean it is entirely out of reach. The solution lies in buying satoshis, the smaller units of a Bitcoin. Depending on your location, you can find merchants and exchanges that accept a few dollars or euros in exchange for satoshis. The term 'stack sats' is a fitting slogan for building up these small units, making Bitcoin more accessible to a broader audience.
In conclusion, while Bitcoin faces significant hurdles in becoming a universally accessible currency, its underlying principles of limited supply, decentralization, and potential hybrid systems with gold offer a path forward. By subdividing the bitcoin, understanding its limitations, and embracing smaller units like satoshis, the dream of financial inclusion for all individuals can become a reality.