Bitcoin is a peer-to-peer digital currency. Peer-to-peer implies that there is no central authority to issue new money or keep track of transactions. These tasks are managed by the network collectively. At present, there are 18,743,025 million bitcoins in circulation. Every 10 minutes, a new block (equal to 6.25 bitcoins) is mined, and the figure changes.
With Bitcoin, you can buy things at many major retailers such as Dell, Overstock, and Amazon. You can even trade them for traditional currencies at specialized exchanges like Mt. Gox. It is designed to give its users maximum freedom and privacy online. And while it is not entirely anonymous, Bitcoin has successfully built a level of privacy which has been a concern for some people who have used services like Google or Facebook.
Bitcoin charges much lower transaction fees than many other payment methods, including traditional banks, and you are not required to disclose your name. Bitcoin cannot be counterfeited, and with an “emphasis on personal responsibility,” it is impossible for anybody except the owner of the wallet to spend bitcoin from it. This ensures that no bitcoin will be paid more than once, thereby lowering the risk of fraud and theft.
And because Bitcoin is decentralized and has no gatekeepers, it is not issued or backed by any state entity. It doesn’t pay interest or dividends or have any other strings attached to it. There are no ATMs for bitcoins yet, but the currency will be compatible with existing ATMs when they are eventually produced. After that, bitcoins should be readily expendable at brick-and-mortar shops in the same way that a $10 bill can be used.
So, Does That Mean Bitcoin Can Take Over Traditional Banking?
Well, in the words of Robert Lons, Co-founder of BitcoinWebHosting.net:
“Think of the implications of a currency that has no borders bars no one form entry, and is not controlled by a government. At a time when we’re seeing just how much power is abused… I think the world is ready for a currency that is decentralized and controlled by the people. But yes, Bitcoin still has a journey ahead of it. It needs greater adoption, and more simplicity to appeal to the general public. But then again, the general public should be more informed anyway. Monetary decisions affect them more than the people that make the decisions.”
Rightly said! To take over the traditional banking system, Bitcoin has to travel miles and accomplish the following.
Easy Conversion To Fiat Currency
Most bitcoin conversions are accomplished by converting the bitcoin to fiat currency, but it is time-consuming and slightly clunky. Moreover, with every conversion, you are required to pay a small fee. In addition, even the sellers are underconfident. This scenario must change. Experts believe that some technological innovations will make using bitcoin easier, quicker, and cheaper.
2020 was an exceptional year that saw Bitcoin adoption rise. Fintech company Square invested $50 in a million, while PayPal allowed its users to use Bitcoin. However, it so still far off the horizon. Digital currency requires more mainstream embracing like this. An American or a European bank allowing its users to use Bitcoin for purchasing or holding assets can give a great boost to Bitcoin.
Since Bitcoin is not tied to any monetary or fiscal policy anywhere globally, the chances of depreciation are always anticipated. Thereby making it a not-so-good option to anyone. Although Bloomberg has predicted Bitcoin to touch $50K in 2021, you cannot predict the future. New ways need to be chalked out to ensure safety and assurance in the minds of the consumers.
Ability To Fulfill Mass Demand
Bitcoin can carry out approximately 400,000 transactions in a day. This is way less than any country in a day. Even a small country like New Zealand carries out 204 per second. Multiply it for a day, and you have your answer. To enter the mainstream and to be able to replace the traditional banks, Bitcoin is not yet ready. It cannot accomplish transactions for a small country, leave alone the globe.
Need we say more!
Bitcoin needs legal approval. Some countries such as the US, Canada, Australia, and the European Union have made it legal, but many like China, Russia, and Bolivia haven’t regulated it.
To take over the traditional banking system, Bitcoin has to move past these. Until then, let’s watch its growth which is no less than a historical revolution in the making.