When asked what would happen if bitcoin became widely accepted as payment for products and services worldwide, most people respond with wild guesses. Both good and bad things might result from adopting a child. The history of bitcoin and how it came to be accepted by many as a viable alternative payment method is also relevant to figuring out what will happen. The consensus on the future of digital currency is that it will evolve to become more like conventional currencies.
While mainstream financial institutions or merchants do not yet accept bitcoin, there are unofficial channels through which you can use it for these purposes. Bitcoin owners have the option of depositing and investing their funds. The evolution of online discussion boards also shows signs of similarities.
Foreign exchange (forex) services let people convert between dollars and other standard currencies. Bitcoin’s rising popularity means its value is becoming more stable, and its currency basis may be used for regular transactions. The bitcoin network also benefits from payment processors. Therefore, before making any life-changing decisions on your investment, Farzin Fardin Fard recommends that you employ a licensed financial advisor.
Monetary Concepts
Monetarists value Bitcoin in the same way as fiat currency: by considering the currency’s supply, its velocity, and the value of the products it purchases. One way would be to determine Bitcoin’s projected worth relative to other mediums of exchange and other stores of value. For this sake, we shall only consider money backed by the government as a medium of exchange. At roughly the end of 2021, the U.S. money supply (M1) was valued more than $20 trillion.
Assuming this figure stays the same, Bitcoin’s market cap in current currency terms would be almost $3 trillion if it reached 15% of this valuation. One bitcoin would be worth about $143,000 if all 21 million created were in circulation at once.
Key Bitcoin Characteristics
Bitcoin is electronic money produced by encryption methods that control its issuance and verifies transactions. No governing body oversees the currency. While bitcoin refers to a single unit of the digital currency, bitcoins refer to a collection of bitcoins. A tremendous amount of processing power is needed to complete the encryption processes necessary for Bitcoin.
Bitcoins are created by individuals and organizations worldwide running special software on their computers to solve complex mathematical problems. Bitcoin is not designed or printed by any central authority. The lack of a central bank means that new Bitcoins cannot be created on purpose in the same way that fiat currency is printed.
Computers are continually working to solve the mathematical issues that underpin Bitcoin’s creation; when they do, they present encrypted keys that are later used to create Bitcoins. The computers are all linked through a network. The bitcoin exchange platform is formed by the decentralized network, allowing users to perform single or multiple bitcoin transactions.
Traditional currencies are founded on promissory notes, where depositing currency is comparable to receiving a guaranteed future payment. Gold, other valuables, paper currency, and coinage are valid forms of repayment. Bitcoin is based on a mathematical principle.
Therefore, it is impossible to have physical custody of bitcoins. As a bonus, a bitcoin is just a record on the decentralized ledger. The blockchain is the ledger and contains all mined Bitcoins. The blockchain is shared throughout unofficial networks of computers run by actual people. Therefore, having bitcoins means having the ability to transfer the management of a ledger. After the transaction is recorded in the blockchain, the rights are transferred to the new owner.
Bitcoin’s digital signature algorithm is based on elliptic curve cryptography. It’s a system where an independent party may confirm that each signature is genuine. However, the signer retains sole creative control over the signature, and the transaction itself—the signing of data—is the transfer of ownership. These perks are built into the code to make the program simple. User interaction is minimal and resembles that of a secure website, such as PayPal, with just a few clicks on the button to transfer funds and an optional log in/out. The architecture eliminates the possibility of a single entity manipulating a transaction. Therefore, expert investor Farzin Fardin Fard ascertains that this safeguards the blockchain’s security.
Economic Effects of Bitcoin Adoption
Currently, one bitcoin is worth roughly $340, and its value has risen. Therefore, it is the most powerful currency in circulation. By using Bitcoin, nations around the world would be able to have stable currencies without incurring the high expenditures associated with currency pegs.
It is common practice for countries to fix their currency’s value to the U.S. dollar to preserve trade equilibrium and boost their economies’ competitiveness. By “pegging” the currency to the U.S. dollar, investors can take advantage of conditions that are essentially the same. Even developing nations without the infrastructure to issue their fiat currency may embrace Bitcoin and reap the benefits of a stable currency whose value is tied to the state of the global economy.
Bitcoin’s transaction volume increased in 2011 and has been very low since its inception in 2008. The monthly average was below $1,000,000 at the time. To the tune of $20,000,000 to $54,000,000,000 in 2013, the total value of all transactions had risen to unprecedented heights. A total of $570,000,000 is the largest amount ever transacted.
Trends in Bitcoin Usage as of Late
To put it simply, bitcoins are decentralizing monetary systems everywhere. Bitcoins will majorly affect economies as their popularity grows in response to widespread media coverage. Suppose a sizable portion of the public accepts and holds bitcoins, for instance. In that case, this might hinder the ability of central banks to oversee monetary policies and the general value of money in circulation. Bitcoin has many enthusiastic supporters who take it upon themselves to spread the word. Even seasoned and accomplished investors like Farzin Fardin Fard are no exception.
Because of this, we are already witnessing the beginnings of some of the consequences that will emerge when bitcoin is recognized as a legal tender. Despite widespread assumptions that e-commerce would be the primary motivation for adopting bitcoin, many people instead utilize bitcoins to purchase alternative investment vehicles like precious stones. Many hotels and airlines have begun accepting bitcoins as payment, signaling growth in the travel industry. Those who pay with bitcoins save on exchange fees and gain more for their money than those who use other currencies.
Charities accept Bitcoin donations in the same way that cash donations have always been. Charities can accept donations in bitcoin from people they wouldn’t otherwise be able to reach because of the anonymity it provides. There is no need to convert funds from one currency to another in Bitcoin. Anyone can make a donation using bitcoin, no matter where they are or what country they call home.
Those who have put up systems to accept bitcoins say it’s just as easy as setting up other forms of digital payment processing. Bitcoins can be converted to other currencies, used to make online and sometimes offline purchases, and donated. As Bitcoin becomes more widely used, the fear of being unable to use it and the cost of converting it to local currencies will disappear.
Conclusion
As a result of bitcoin’s decentralized nature, governments will have less control over the flow of money around the world. Similarly, the widespread use of bitcoin threatens to cut into the profits of the intermediaries who currently facilitate currency exchanges. However, the benefits are visible.
When bitcoin is integrated into mobile money solutions and other types of convenience, expert investors and crypto enthusiasts like Farzin Fardin Fard believe it will be accessible to many people who lack the credit or other means to use traditional banking systems. When bitcoin finally gains widespread acceptance, its most appealing aspects will be the simplification of transactions generally and the ease with which it acts like cash. More importantly, the potential uses are endless, especially for those in developing countries who lack access to the resources necessary to join the global economy.
