Will The Legitimacy Of Bitcoin Devalue World Currencies?
Will The Legitimacy Of Bitcoin Devalue World Currencies?
Bitcoin offers certain benefits. Its legitimacy is what is commonly questioned. This is changing as Bitcoin are accepted by a huge list of companies. These include Wal-Mart Stores, Inc.(NYSE:WMT), Apple Inc.(NASDAQ:AAPL),
Amazon.com, Inc.(NASDAQ:AMZN), and Tesla Motors Inc (NASDAQ:TSLA). That list is growing, and with each name added to it, it brings Bitcoin closer to mainstream acceptability.
Bitcoin is establishing its legitimacy and should be considered a valuable addition to your portfolio. It offers unique protection for investors.
Bitcoin is a virtual currency created using powerful computers that solve complex mathematical equations that mine it. Introduced in 2009, Bitcoin can be exchanged for goods, services or other currencies. Bitcoin transactions do not charge a fee nor require a central authority to verify. Transactions and ownership of Bitcoin are recorded anonymously in what is called blockchain. The use of blockchain is a form of self-regulation built in the virtual currency, and it helps to cut the risk of fraud.
Critics have often cited that widespread adoption of Bitcoin could lead to unprecedented financial instability in the world. The decentralized currency system of Bitcoin has also been cited as a potential source of financial catastrophes, especially as a threat to the existence of central banks.
Well, what you see here are worries that Bitcoin could render some institutions obsolete, and without question, that is one of the reasons Bitcoin is likely to spread like wildfire. The success of any currency depends on its acceptance and Bitcoin has that advantage. The cryptocurrency is supported by the trust of the users rather than state authority.
In some ways, Bitcoin is threatening to shatter the myth of legal tender, and you can’t expect everyone to be happy about that. But considering the mistrust in banks and government authorities in the recent years, especially after the global financial meltdown in 2008, trust in Bitcoin may increase, making it harder to suppress.
Bitcoin just got a major legitimacy boost that it badly needed to take on the world currency. Coinbase Inc., the best-funded exchange platform in the world, has been launched to provide a more secure exchange platform for Bitcoin traders.
The creation of Coinbase and the fact that the entity is backed by reputable banks and venture capitalists will allow Bitcoin to gain popularity and mature faster. Coinbase investors include the New York Stock Exchange, USAA Bank, Union Square Ventures and a host of other investors.
The exchange boasts an investment of $106 million, 2.2 million Bitcoin wallets and over 40,000 merchants. The aim of Coinbase is to expand into 30 countries by the end of 2015. Coinbase will operate in 24 states in the U.S., starting with customers in the covered states only before expanding to more states and then abroad. Some more exchanges are set to open in the U.S., further boosting the legitimacy of the virtual currency.
The legitimacy concerns of Bitcoin have steady been overcome as the currency is currently accepted by many companies, large and small. Wal-Mart Stores, Inc.(NYSE:WMT), Apple Inc.(NASDAQ:AAPL), Amazon.com, Inc.(NASDAQ:AMZN), and Tesla Motors Inc (NASDAQ:TSLA) all accept Bitcoin and the currency is even available in gift card form.
The companies that have added the currency are opening an avenue to revenue that they may not have had access to before. That is the consumer with no bank account. In 2013, 7.7% of the US population did not have bank accounts. That’s 9.7 million people. This is not to say that every one of them will flock to Bitcoin, but it does create an alternative for companies to attain these consumers’ dollars. Gift cards may play a big part in this.
The numbers of Bitcoin wallets has been increasing rapidly as the popularity of the digital currency grows. The largest Bitcoin wallet provider, Blockchain.info, said that over 3 million Bitcoin wallets have so far been created. There were less than 80,000 Blockchain wallets at the start of 2013.
The major concern among holders of Bitcoin has always been the volatility of its value. The creation of well-funded and regulated exchanges in the U.S. will work well for the virtual currency. Addressing the issue of volatility will allow currency traders to expand their involvement with Bitcoin and build more trust in it.
The value of Bitcoin, determined by existing exchanges, is currently about $240, down from a peak of $1,200 back in 2013.
Benefits of Bitcoin
Once the legitimacy of the virtual currency is established, Bitcoin has numerous benefits that will make its adoption rapid.
As a digital currency, Bitcoin has lower risks of fraud compared to the traditional bank notes and coins.
The ease of transferring the digital currency has also been a major selling point for Bitcoin and a driver of its prominence in the recent years.
Bitcoin could be an opportunity for the unbanked population of the world to overcome the various payment barriers they are facing, such as lack of access to credit cards. The fact that nearly half of the world population is unbanked means that Bitcoin has a wider market to address once it matures as reliable store of value.
Some 82,000 businesses now accept Bitcoin and the value of the digital currency has kept on rising, now cited as worth $3.2 billion, according to Bitcoin tracker Coindesk.
Bitcoin has been cited as an epic revolution, likened to the printing press back in the days. That means that traditional forex and commodities exchanges may have little to live for in a mature Bitcoin world. As for the store of value, Bitcoin could become the new gold. All that Bitcoin requires is solid backing, and the coming of Coinbase is a real confidence boost for the digital currency. Once it becomes openly traded on a legitimate exchange with wide acceptance, it could become a prudent portfolio hold to shield against global and economic fluctuations. It also creates an innovative way for companies that accept the currency to capitalize on the unbanked consumer.
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