Comparing Bitcoin (BTC) With Traditional Currency – Will Ga
Essentials you need to know
Bitcoin is a breakthrough innovation, and it can actually replace our traditional currencies. But how is this digital currency so different from the money we use today? A $10 bill also has no other value other than what we agree as a society.
And if the future society decides it wants to trust the Bitcoin system instead of the dollar model, then it can really become the currency of the future.
In essence, Bitcoin is quite different from the United States Dollars, for example, because it is not backed by the US state. This means that no institution has the power over this currency.
The mere fact that the US government requires all payment to be in USD builds a direct demand for it. This demand cannot be easily replicated by cryptocurrencies.
But if we look back at our history, the involvement of a government in the monetary system goes deeper than merely demanding tax payments in its preferred currency. Understanding this history is beneficial for us to understand the possible restrictions of virtual currencies such as Bitcoin.
In general, governments have the inherent right to control our financial systems. It is important to take note that the state values the system of seigniorage for its revenue, so it is quite impossible to let this revenue source be replaced by a private money source like Bitcoin.
At present, cryptocurrencies are effectively not relevant if you compare it with the USD, which is a global payment system. However, those who are expecting the expansion of Bitcoin to a global scale are also considering the possibility that Bitcoin will not remain exclusively in the private domain.
Once it becomes wide and large, this currency will definitely entice the government as signified by the declaration of the US Senate to be open for the long-term purpose of digital currencies.
Meanwhile, the concept of private currency as a solution to the inefficiencies of the barter system has minimal historical importance.
For instance, although people usually believe that precious metals such as silver and gold were used gradually by the private sector as another medium for value exchange, in practice, people are not sure if the metallic component of currency coins are equal to its agreed value.
Coins were only widely accepted as a medium of exchange when governments had standardized its production. The Roman Empire, for example, practiced the currency system. After its downfall, however, people gradually returned to the barter system.
Advocates of Bitcoin also believe that the verification and security problems in Bitcoin are less likely to impact a virtual currency. This area is yet to be seen in our future. Bitcoin enthusiasts have also cited their commitment to limit the supply of digital coins, but currency experts are not completely relying on these claims.
They oppose the interest of those who are regulating these currencies, so trusting them may not be the best thing to do.
Published at Mon, 03 Feb 2020 23:28:47 +0000
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