Bitcoin is back with a bang yet again. However, the popular cryptocurrency could not manage to secure the stunning height that it gained in 2017, but it has still climbed up to approximately $10,000. It has not achieved the status of widely accepted currency as of now. Many retailers have begun to accept Bitcoin, but the large majority of the regular payments are still done with fiat currency. Bitcoin suffers from volatility issues, and people are not keen to hold it for a longer period of time. No person would be interested in getting his paycheck only to discover that its value has halved by the time it comes to purchasing foodstuffs. Bitcoin and the US Dollar have emerged to be a good investment and great for purchasing things. Some economists are of the opinion that Bitcoin or some other cryptocurrency may soon replace fiat money as the standard mode of payment.
Why Is It Important to Have the Value of a Currency?
Currencies have emerged as the lifeblood of economies all across the globe. Most of the transactions that we make every day require currency. It offers a global store of value that can be voluntarily used by the other society members. With the availability of currency, transactions can take place in a swift manner as sellers will not have to go through a harrowing time to find buyers with whom they want to do some business. In the earlier period, people often relied on commodities or precious metals such as gold as a mode of payment. It is because they were considered to be having a comparatively stable value. And, gradually, societies all across the globe switched to minted currency as an alternate.
Top 5 Qualities of an Ideal Currency
A commodity that becomes appropriate to be utilized as money should offer the quality of portability. The ideal currency should be conveniently transported from one location to another sans any hindrance. Or, more precisely, an ideal currency should have high value in small bulk. Yellow metal and silver possess this quality in abundance.
The major factor in the upkeep of a currency’s value is its supply. If the money supply becomes too high, it may lead to a sharp rise in the prices of goods, thus causing economic collapse. And, if the money supply becomes limited, it may also become equally detrimental to the economy. When it comes to fiat currencies, governments all across the globe emphasize on printing money as a method of controlling scarcity.
For a currency to become ideal, it must be equipped with the feature of divisibility. The currency must be divisible into smaller incremental units. If the currency lacks the flexibility of divisibility, it cannot be used as a mode of exchange for all kinds of goods and services within the economy. The currency must be equipped with adequate divisibility so that it can precisely showcase the value of all goods and services available all across the economy.
The currency must contain the intrinsic feature of utility to become effective. People in possession of currency should be able to trade units of currency for goods and services. And, it is the sole reason for which currencies were developed. It can effectively eliminate the scenario wherein an individual will be compelled to barter directly for goods and services. The feature of utility also allows currencies to be conveniently moved from one place to another one. Heavy, precious metals and commodities fail to meet this demand.
Currencies should be able to get transferred sans any hassle between various individuals in an economy to make it useful. If a particular currency such as fiat becomes transferable within an economy and between countries, it will become useful.
Bitcoin has emerged as a useful cryptocurrency that uses algorithms to eliminate all unlawful duplication or creation of Bitcoin units. It offers users intense privacy protections. It does not divulge the identity of a person or group involved. It has successfully eliminated high banking fees. You will face very few transaction fees for international payments as well.
On the other hand, various global recessions over the years have reflected some of the shortcomings of fiat money. The Central Bank’s stronger control at times does very little to curb inflation or recession. It led many people to think that gold could emerge as a stable currency amid its unlimited supply. The physical aspect of fiat money causes many challenges as it can be a trouble to move around with huge amounts of money. That is not the case with Bitcoin. The continuous accessibility of more tokens to be generated has stimulated the powerful mining community.
Therefore, we can conclude here that Bitcoin may present users with excessive volatility, but soon Bitcoin technology will capture the investors’ interest based on their potential role in future payments and wealth transfers. If you want to invest in Bitcoin then you must have to look at the Bitcoin Revolution once. It is a Bitcoin robot trading platform which focuses on making profit from Bitcoin.