The current market cap for cryptocurrency exceeds 1 trillion US dollars, making them too essential to ignore. Some people argue that Bitcoin, the pioneer cryptocurrency, is 21st-century gold. Satoshi Nakamoto wanted Bitcoin to serve as a decentralized digital currency. However, this virtual currency does more than a currency for paying for goods and services.
To some people and businesses, Bitcoin is an asset. Therefore, they purchase Bitcoin on digital platforms like https://bitiq.org/es/ and hold them in their crypto wallets. Eventually, they sell their tokens at higher prices to make profits. High volatility also makes Bitcoin a tradable asset, and these platforms facilitate crypto trading. But before embracing Bitcoin, here are things to know about this potential 21st-century gold.
How Bitcoin Differs from Fiat Currencies
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Bitcoin differs from fiat currencies and other assets because it lacks the backing of a centralized authority. The entire government backs the traditional currency it allows the citizens to use as legal tender. Although countries like El Salvador have made Bitcoin a legal tender, most nations don’t recognize Bitcoin, meaning accepting it as a payment method is not a legal obligation. Also, Bitcoin doesn’t involve intermediaries like banks in transactions.
Not All Merchants Accept Bitcoin
Perhaps, you’re wondering whether you can buy clothes and food with Bitcoin. Currently, only a limited number of stores accept Bitcoin payments. The trend of different venues taking different payment methods has increased recently. Consequently, some shops, local and online, accept crypto payments. However, Bitcoin is not a standard payment method. While the latest developments allow cheaper and faster transactions, validating a transaction with this cryptocurrency takes around 10 minutes. Also, some merchants fear Bitcoin volatility which could leave them with losses or profits.
Some People See Bitcoin as a Protection against Inflation
Bitcoin’s protocol limits its supply. The world can have a maximum of 21 million coins only. Currently, miners have produced around 89% of the total supply. In most cases, the central bank controls the fiat currency supply. Therefore, the government can instruct the central bank to produce more fiat money lowering its value. And this affects the consumers negatively. Many individuals and enterprises see Bitcoin as a protection against inflation due to its fixed supply. Essentially, no entity can manipulate Bitcoin’s supply or value.
Bitcoin Could be a Haven
Many investors prefer assets that governments can’t control. For instance, many people have sought gold due to its deflationary characteristics. But some investors argue that Bitcoin could become digital gold.
Historically, gold was volatile at some point before stabilizing. Bitcoin’s price is also unstable, making it a risky investment. Therefore, Bitcoin may not be reliable value storage today, but some experts argue that it will eventually stabilize.
But this could take longer because many investors use Bitcoin for speculation and investments. Also, the limited credibility due to minor market and large purchases significantly affects Bitcoin’s supply-demand equilibrium. Additionally, Bitcoin’s value fluctuates depending on the worth people accord it. Minor changes in the overall perceptions of investors could affect Bitcoin’s price.
Parting Shot
Bitcoin has many challenges to overcome before becoming 21st-century gold. However, the latest developments in the crypto industry could make Bitcoin more profitable and greener. More economies are implementing regulatory measures, which could enhance Bitcoin’s stability. Even with some central governments creating digital currencies, Bitcoin remains the most prominent digital currency. Also, countries like El Salvador have made it a legal tender, giving it a boost. Therefore, this virtual currency could eventually become a globally acceptable digital currency and crypto asset.
