Some people see Bitcoin as digital money, others call it a scam, some think transaction throughput is simply way too low. So what will it become, and why is Bitcoin considered the new Gold? If you are still wondering why do we even need a blockchain, you can read Don’t trust anyone, use a blockchain.
Satoshi Nakamoto authored the Bitcoin whitepaper, where he described the currency as a peer-to-peer electronic cash system. He was the first person to solve the double-spending issue for digital currencies using a peer-to-peer network. So he described Bitcoin as an electronic cash system, but what if it actually is digital gold?
The Use case of Bitcoin
The Bitcoin blockchain is not fast enough to use it for day-to-day payments. It wouldn’t be practical to pay for our groceries in BTC, it would just take way to long for the transaction to be confirmed. And the more users the blockchain has the more transactions there will be to confirm, so it will just become slower by time.
In my point of view, I see Bitcoin as the new store of value. Think of Bitcoin as Bitcoin the new gold. Since the whole idea of Bitcoin is to keep it decentralized and not controlled by any government or institution. Keeping our money in Fiat currencies don’t seem safe enough, we can get that thought by looking at the economies of Venezuela or Argentina.
Let’s think of a hypothetical scenario where the value of BTC crossed $100,000, all these fluctuations or swings in the market we are currently worrying about, won’t matter anymore. Bitcoin would transform into the best store of value since you can easily move it, you can only access it with your wallet, etc. Other assets such as Land or Gold would still be used. However, Bitcoin, the new gold, should be the safest store of value together with some other cryptocurrencies.
In the case where all fiat currencies collapse, the so-called altcoins will take their place. The fastest blockchains with the highest scalability will be used for the daily grocery shopping. These will be fast enough to pay at the supermarket and at the snack bar.
The collapse of the Fiat currencies
As you might know, the current crash in the economy of Argentina and Venezuela ruined most of their inhabitants. This hyperinflation is caused by the money the government keeps printing. It reached such an extreme point, where the population had to pay over 14 million bolivars for one single chicken.
The supply of Bitcoin can only be mined, this is a controlled increase fixed by Satoshi Nakamoto. If the society had used a cryptocurrency such as Bitcoin, they would have a decentralized store of value. So the only one who can influence the value of Bitcoin is the free market. If a bigger fiat currency such as the dollar suffers under hyperinflation, our society won’t trust these kinds of currencies anymore and might shift into other assets such as gold.
Bitcoin the new Gold, and the perfect store of value
Gold, like every currency, has a value because we assigned one to it. At the end of the day, gold is just metal and the dollar is just paper. But somehow we think it’s valuable. Although, the difference between them is that you can’t print more gold. You could extract it from the mines, but it’s not as easy. Long story short, for a currency to be perfect it needs to have a limited supply and no government or institution controlling it.
Alexander has worked in community growth for multiple cryptocurrency companies. He is now the Sales and Operations Manager for CoinDiligent. In his free time, he writes articles sharing his industry insights. You can get in touch with Alexander on LinkedIn.