Is Bitcoin The New Gold ?
Having only been created in 2008, Bitcoin remains in its early stages. More and more people are beginning to see its advantages, but it remains unclear what it’s primary use will be.
When Bitcoin first arrived, it was heralded as a revolutionary method of paying for goods and services. Its decentralized nature would lower international transfer fees while providing a more secure, reliable database of transactions.
However, while more and more people are investing in this cryptocurrency, the number of people spending it on day-to-day transactions isn’t growing anywhere near as fast.
Why aren’t people spending Bitcoin with retailers?
The most obvious answer is that there still isn’t a critical mass of retailers accepting Bitcoin as payment for goods and services, but let’s delve deeper into the reasons why that might be.
One reason might be the length of time it takes for Bitcoin transactions to be confirmed. It typically takes hours, and this will inevitably have to be improved for Bitcoin to be globally accepted by the retail industry.
On top of this, another reason is the volatility of the currency. Retailers won’t know what they’re getting for their sale, and customers aren’t completely aware of how much they’re paying. The value of Bitcoin can jump considerably in the couple of hours it takes for transactions to be finalized.
This is why most Americans will pay for goods and services with dollars. It’s a questionable long-term investment, losing value with inflation all the time. But it loses value at a steady rate, so at least people have a solid idea of what it’s worth.
Bitcoin as a safe haven
On the other hand, Bitcoin prices are barely impacted by inflation or the state of the economy, at all. This is one of the leading advantages of its decentralization.
It’s for this reason that many people may start to turn to Bitcoin as a hedge against the economy tanking, just as they do with gold – an asset which is equally inadequate for day-to-day spending despite what people thought of this in the past.
Just like gold though, Bitcoin has undoubtedly proved to be a reliable long-term investment so far.
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