With the Bitcoin price swooning over recent weeks it’s behooves cryptocurrency advocates to take a step back and examine just how far digital currencies have come in the court of public opinion. In a world of the rising dollar the fiat currency system still appears to be strong and here to stay (appearances can be deceiving). Credit cards are still prevalent and, at least for me, dominate as the medium for daily purchases. With that being said, why is Bitcoin still puttering along and why hasn’t it taken off “to the moon”?
The dollar continues to surge as the reserve currency of the world. No, this is not due to the dollar’s inherent strength, but more so a result of the “race to the bottom” with many nations devaluing their money supply to remain competitive in the global marketplace. What this means, at least from an investment and safe haven standpoint, is that the dollar is firmly entrenched as #1. Much like how gold will not have its eventual breakout without a declining dollar, Bitcoin sits in the same boat…at least for now. Look for Bitcoin to increase in value iin a post crash environment of stringent capital controls within the next 1 – 2 years.
Paying with plastic continues to be popular. Incentives with airline and travel points motivate the public to pay with credit cards with the promise of future rewards. Personally I use credit cards for the vast majority of my daily purchases for this very reason – ease of use and because I really like to travel. Credit cards get me closer to my next trip and I find a lot of value in that. It is for this reason that I don’t think Bitcoin can compete directly with credit cards when it comes to payment systems, at least in the current environment. Some substantive change (again, a large correction) would have to happen to dis-incentivize people from paying with credit and encourage them to pay with and more efficient version of cash (Bitcoin).
The aforementioned themes are a couple of the main reasons why Bitcoin still has not become the currency of choice in the world. What Bitcoin does have going for it is that it is a step in the right direction regarding how to manage an economy in this day and age. Fiat currencies and credit cards are antiquated mediums for transferring value…..they will be disrupted, and likely by Bitcoin, however this will take time and a fundamental shift of consciousness within the citizens of the world.