Will Bitcoin ever be a major payment network?
Bitcoin’s soaring valuations back in 2017 brought this cryptocurrency into the media spotlight. In addition to a declaration that somebody had invested in Bitcoin being fashionable, people wondered whether this virtual currency would gain mass adoption. Bitcoin has a simple core concept. Satoshi Nakamoto hoped to create a peer-to-peer currency that wouldn’t require people to involve financial institutions and other intermediaries in their transactions.
Some people have argued that Bitcoin could be the ultimate global currency. However, the world has other cryptocurrencies too. For instance, Ethereum is also a popular virtual currency. And people are using platforms like the Crypto Engine to trade this virtual currency. Nevertheless, Bitcoin remains the dominant and most popular virtual currency.
Bitcoin as the Single World’s Currency
Predictions that suggest Bitcoin could be the only world’s currency are rife all over the world. However, Bitcoin must meet specific criteria to become the single currency for the world. Here are the two main criteria.
- New and innovative technology: It’s no secret that many countries are doing all they can to leverage the blockchain technology on which Satoshi built Bitcoin. For instance, the Housing Minister in the United Kingdom has hinted that the country can save up to £8 annually by embracing this technology. And the government is already carrying out proof-of-concept tests for payments processing benefits.
- Network effects value for Bitcoin: Most companies derive value from their network effects. For instance, if a company had a single user, its value would be zero. If Twitter didn’t have users, it wouldn’t have any value. Adding two or three people gives the network its value. Thus, the user base provides a platform with its utility, creating network effects. And this is also the case for Bitcoin. If nobody uses Bitcoin, the payment system wouldn’t have value.
Currently, the Bitcoin network is handling many transactions at any given moment. That’s because it has many users that give it a user base. Compared to other cryptocurrencies, Bitcoin has the most extensive user base. However, conventional systems like credit cards have a higher user base.
That means for Bitcoin to become a primary payment system, more people using traditional payment systems must switch to this virtual currency. But is the Bitcoin network prepared to handle a massive influx of users from traditional payment systems to this virtual currency?
While this can be challenging, Bitcoin has been growing over the years. This virtual currency is also undergoing some developments to enable the network to cater to a potential increase in the user base. Satoshi Nakamoto anticipated a potential users’ influx and planned constant developments that would handle network limitations when necessary.
The transactions that the system process every second increase as more users join the Bitcoin network. Luckily, the more users enter the system, the more calculations the Bitcoin network can complete. That’s because Satoshi developed Bitcoin with users in mind, and the system continues to grow, mature, and get more optimized with the community growth.
Some people see Bitcoin as a financial experiment that may have become uncontrollable. However, others see it as a currency that could eventually be acceptable globally. Thus, some individuals see Bitcoin as a money evolution. Whether Bitcoin will become a primary payment system that the whole world will embrace is only a matter of time. However, ruling out a bright future for Bitcoin might be unwise. That’s because this cryptocurrency has shown its potential as a payment system. Its acceptance and adoption have also increased over the years. Recently, El Salvador made Bitcoin a legal tender, and more countries are considering similar measures. Thus, Bitcoin is not a mere experiment to ignore.
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