Are you a Bitcoin believer? Some say Bitcoin will become the worlds currency.
Could that be true? At the end of 2008, due to dissatisfaction with the existing Fiat currency system, Satoshi Nakamoto designed bitcoin and its circulation network, which has a fixed total amount, is not controlled by any organization or individual.
Although Satoshi Nakamoto’s original intention was to design an applicable electronic currency, bitcoin was not accepted by the market, and rarely adopted in daily life in the first few years. But the rapid development of bitcoin later was beyond everyone’s expectation, perhaps including Nakamoto himself.
The initial flow of bitcoin was only carried out among few geeks as a hobby to support its circulation. Since then, there have been more enthusiasts. But they can’t get bitcoin directly by mining, so they use the method of purchase to obtain these bitcoins.
With the increasing demand of bitcoin enthusiasts, some platforms began to provide centralized matchmaking of bitcoin, aiming to achieve the pricing based on the Fiat currency. With the emergence of these platforms all over the world and the 7 * 24 trading mode of these platforms, the pricing of bitcoin has formed a basically consistent pricing around the world.
In 2020, bitcoin has achieved rapid development. In March 2020, in order to fight the epidemic, the United States adopted the quantitative easing policy, which leads to the depreciation of all assets denominated in US dollars.
Institutional investors who hold a lot of assets begin to look for high-quality assets to fight inflation, and finally focus on bitcoin. By April 2021, bitcoin has now been widely accepted as a value storage tool. In addition, bitcoin is becoming a real currency. Venezuela’s government has begun to use crypto digital currency to trade in foreign trade.
A study by Citibank also suggested that bitcoin would probably be used in international trade. For a potential currency with a history of only 12 years, that is very fast.
Compared with all Fiat currencies, the fixed total number of bitcoin are the most fundamental difference between it and Fiat currencies. In the current market background of a large number of additional issuance of Fiat currency, this feature is more attractive and valued.
The development of the underlying technology of bitcoin is also promoting the use of bitcoin as a kind of currency. Lightning network on top of bitcoin network can support micro payment based on bitcoin.
Each transaction costs only 0.01 cents, and the completion time of the transaction only takes 1-3 seconds. Such a cost and efficiency will enable bitcoin to be promoted in a wider range.
At present, there is a very popular application “strike” , which realizes the transfer between different legal currencies based on the lightning network. It has just been put into operation in El Salvador and will be promoted in Europe and other places in the near future.
As Bitcoin become convenient enough , it is likely that the number of retailers and businesses that accept Bitcoin transactions will continue to rise. This in turn will further increase the usage of Bitcoin amongst consumers.
The three basic attributes of money include value storage, measurement unit and transaction medium.
From the perspective of these attributes, the two attributes of value storage and transaction media have been adopted, but the function of measurement unit still needs time to develop.
However, judging from the current trend, the unit of measurement attribute of bitcoin will be gradually realized.
Bitcoin is therefore likely to be a digital currency that is circulating globally outside the existing Fiat currency system.
Xiaoyu Ma mainly writes about bitcoin-mining companies based in China. He used to be a senior editor of NetEase Finance, a famous financial media in China.