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Can Bitcoin and other cryptocurrencies be the next form of currency?

Many experts believe that cryptocurrency is about to witness a major change in the market. It has come a long way since the first Bitcoin in 2009, which used to buy a couple of pizzas. While Bitcoin attracted huge attention in the following years, it captured significant investor and media attention in April 2013 when it peaked at a record US$266 per bitcoin after surging 10-fold in the preceding two months. Bitcoin grew to a market value of over $2 billion at its peak. However, a fifty percent drop shortly after that sparked a huge debate about the future of blockchain-powered cryptocurrencies. Currently, the reality of the financial and economic situation of the world is not good either. Each time one switches on to a news channel, one hears about the financial debt crisis, trade wars, overvalued market, record-breaking low bond yields, and now possible economic fallout due to COVID-19 pandemic. Analysts claim that if there were another liquidity or credit crisis like back in 2008, the global economy would not be able to sustain the hit.

Before we proceed further, let us understand what cryptocurrency is. It is a digital currency that is created and transmitted using cryptographic methods, mainly based on the blockchain technology. It is similar to real or fiat money and has an official rate. Bitcoin is a type of decentralized cryptocurrency that uses peer-to-peer technology, which enables all functions such as currency issuance, transaction processing, and verification to be carried out collectively by the network. Currently, they are created digitally using a “mining” process that requires powerful computers to solve complex algorithms and crunch numbers. They are now produced at the rate of 25 Bitcoins every 10 minutes and will be capped at 21 million, a level that is expected to be reached in 2140. Unlike fiat money, it is not issued by the Government nor Financial regulation services.

The main problem is uncertainty. At the time this article was written, the value of one Bitcoin was US$9,118.87, and ethereum has a value of $233.34.  Besides, as the Bitcoin will enter the market, it is expected that its demand will increase, and the traditional dollars will become a thing of the ‘ancient’ decades. Jeremy Liew, the owner of Snapchat, and Blockchain co-founder Peter Smith predicts that by 2030, the price will have reached $500.000. In the future, Bitcoin will act as remittances for many people. People will start opening Cryptocurrency Bank Accounts, and cryptocurrency Debit cards will become a regular thing. They will turn to Blockchain to safeguard their savings and move money across borders, strengthening the technology’s footprint even in case of economic struggles.

Additionally, the likelihood of crypto to feature in NASDAQ is more. This could further add credibility to Blockchain and its uses as an alternative to conventional currencies. Even banks might be ready to offer cryptocurrency loans to suitable candidates.

While usage of cryptocurrency ledger to allocate funds, will make government expenditure transparent and prevent corrupt officials from exploiting tax money, some governments are already opting for cryptocurrencies based on SEC Guidelines. For instance, In Estonia, the government has already adopted Blockchain Technology called X-Road, which stores the complete credentials of all citizens. The main snag is that banks and governments can’t control Bitcoin, as the Blockchain is a self-evolving entity controlled by the end-user.

Though, because of untethered nature, crypto coins can retain their value far more easily in the face of economic strife, there are few bottlenecks it needs to tackle first. One of the major threats is quantum computing. These digital currencies function on military-grade encryption for the networks that control the various blockchains.

Google’s first-ever quantum computer can break 256-bit encryption in four to five evolutions of the processor. If this technology falls into the wrong hands, especially hackers, then the security of the Blockchain is under severe threat. There would be noting stopping hackers from breaking into the Blockchain and destroying it. Other concerns are regarding the finite amount of cryptocurrency, volatility, and utility. Despite being the most advanced cryptocurrency, Bitcoin, can still not process transactions as fast as the VISA network. According to research, Bitcoin can only process seven transactions per second, whereas Visa does hundreds of thousands of transactions. Once these issues are dealt with, the cryptocurrency revolution will set off, which means change is the only guarantee.