Thanks to Bitcoin’s success, the concept of cryptocurrency has gone from being used marginally by crypto experts to being an asset in which large financial institutions invest even though regulation is still in its early stages. In the case of Bitcoin, the value has gone from nothing in 2010 to close to $20,000 in December 2017, which makes it attractive as an investment asset.
Although the use of Bitcoin and other cryptocurrencies is not illegal in most countries, it is only explicitly legal in some. The regulation is not homogeneous, which, together with its high volatility, makes it difficult to use as an investment asset for the general public.
On the other hand, Fiat currencies are employment creators. Public sector employees want to protect their jobs and pensions, thus they create more red tape type of public servants. That coupled with the external people controlling the big money markets and the printing of notes, central banks and lobbyists makes us think of a closed knit cartel.
The use of Blockchain and giving the power back to the people is the only way to reduce costs, taxes and big cartels. Money should only be viewed as a way to pay for the costs of products and services, so Fiat can be replaced with any other form of currency. Why not crypto? In the early days, there was no Fiat currency and people paid in many ways for the products and services, including with precious metals like gold. So, in the digital age, why not crypto? It’s fast, easy to carry, encrypted, no paper, less money laundering (by 1000 times less compared to Fiat), history of its full life in a ledger, and many other advantages.
However, although it is not yet massive, the use of Bitcoin and other cryptocurrencies is increasingly widespread daily. New sites are added to those that allow paying with cryptos, such as the travel portal Expedia or Microsoft.
The use of cryptocurrencies also has great potential in the world of money transfers, particularly to recipients without bank accounts (Western Union type). Although this may seem unnecessary, living in a European Union country, it is estimated that there are more than 2.5 billion people in the world without a bank account.
Finally, it is essential to indicate that the underlying technology of Bitcoin, the Blockchain, as an implementation of a distributed registry without a central authority, has a potential for use that goes far beyond cryptocurrencies. In this sense, Bitcoin was not only a revolution at the financial level, but at the technological level, it has introduced one of the most disruptive concepts in recent years.
There are numerous digital wallet apps that do the functions of banks and multi-currency wallets, with virtually no wire transfer fees and transactions that happen instantly. Also, several countries have announced their intention of creating a crypto national currency. Also, countries like Estonia, Dubai, and Malta are all planning to make the Governments blockchain-based and easy to onboard even citizens with virtual residency. Soon, they could have a bigger virtual population and better services for people to consider for Tax and efficiency-related benefits for residency. Then what happens to those so-called western world and developed governments?
Author: Mru Patel, Partner and COO of Flash Group, CEO of Sapian Capital