Since El Salvador enacted Bitcoin law and listed Bitcoin as legal tender, the entire global monetary system has ushered in a historical change.
The root of virtual currency is actually part of the process of human virtualization, and it merges or breaks certain frameworks at the same time.
Breaking from the centralized pyramid structure, bottom-up consensus behavior from the community instead of being led by the government
Of course, the current situation is still based on the overall power of the government, so it will continue to pull in the process of supervision and freedom/centralization and decentralization, and finally find a dynamic balance.
On the other hand, integration is divided into several aspects
It integrates everything from the primary market to the secondary market that was originally dominated by the government. It has the functions of a capital market and a currency market, and is more social.
Bitcoin is “The One”right now!
Bitcoin is not a thing of the future or the “next big thing” anymore. It is here, and it is working extensively to change the global financial model as we have known for the past century. It is, what can be called, the only natural progression to the form of money.
As you see, the concept of money has seen several forms in human history, since it came as an alternative to a barter system. Over the ages, humans have evolved from using precious metals in exchange for goods and services to digitally transferring a currency with a swipe of a finger. It was all part of the financial evolution of human civilisation.
How to determine the value of a currency
Humans have created and used numerous forms of currencies since the age of dawn for ease of transaction. The evolution was mostly fueled by the limitations of a barter system – time taken to find the right commodity, agreeing to a quantity, restarting the process if the deal doesn’t go through.
Products such as salt, seeds, beans, animal skins and even weapons began to be used over time. However, because they are easy to produce or purchase, their value is limited. If you grow beans at home, you won’t trade wheat for beans, will you? So if everyone could grow beans, they would lose their relative exchange value.
The scarcity of the “currency” was the key-value determinant.
Therefore, metal coins are the main form of most currencies in human history. It was not until the 16th century that paper money was widely used. Paper money provides a more divisible form of money for both parties to share and therefore takes precedence over metal coins.
Even so, it was issued by banks to depositors and borrowers, not by the government as it is today. As paper money increased global trade over the years, governments around the world began to regulate these currencies to maintain their economies. As we can see today, this regulation has largely produced the financial system.
Bitcoin is not Gold,it is better.
Now that we know what the expected characteristics of an ideal currency are, it’s easy to see how bitcoin competes with fiat money and gold. Taking gold as an example, we can easily determine how bitcoin is better than gold.
The scarcity of precious metals has almost helped gold and silver maintain their relative value for centuries. In ancient times, they used to solve a problem. As mentioned earlier, they are easy to transport, malleable into coins and have a long shelf life, which is basically better than any other commodity.
These advantages are now almost lost in this metal. Apart from their established history as an integral part of the financial system, they are impractical for people today. They are not easy to transfer, they are not as durable as other currency options, they are not as divisible, unsafe, decentralized, and of course they are not so smart.
Bitcoin stands out among these standards. Cryptocurrency brings one of the most modern forms of technology – blockchain – to solve these key problems.
The number of bitcoin is limited, and only 21million bitcoin exists in the world. So it maintains its relative value, just like gold. It also trades safely, decentralised and efficiently. In short, bitcoin is an end, not just in the financial system, because of the old practice.
Think about it – if all legal currencies are removed from the world today, will you trade on gold or bitcoin?
The answer is obvious, right?
Bitcoin is better than fiat money
Based on these and other factors, we can compare bitcoin and cryptocurrency with fiat money.
The nature of bitcoin is limited, while all other fiat money is produced regularly by the government. This means that bitcoin is becoming more and more scarce, so it has a high value. That’s why the price of a bitcoin against a variety of currencies is soaring like skyscrapers.
Of course, the continuous supply of fiat money is very important to prevent quantity shortage, but the excess quantity in turn leads to the decline of its value and inflation. Part of this regular supply is also used to compensate for damaged banknotes, making them unusable. Bitcoin doesn’t have this problem, just because it doesn’t show up in physical form.
In addition to being more “durable” than fiat money, cryptocurrencies such as bitcoin are also secure. For example, bitcoin works on a decentralized ledger system, which checks accuracy multiple times on each ledger, meaning that transactions are approved only when all systems on the network approve transactions based on their own records. This means that there is little chance that bitcoin will be forged.
Another very important factor in favor of bitcoin is its divisibility up to 8 decimal points. 1 bitcoin can be cut into 0.00000001 parts, each of which is called “Satoshi” for easy trading. It’s like the U.S. dollar can be divided into cents, although no legal tender can be as divisible as bitcoin.
Bitcoin Risk and will be regulated.
Remember how the world went from metal coins to paper money? The reason for this change is that the financial institutions and regulators at that time promoted it. They saw these benefits, and they entered a new stage in human history, which continues to this day.
At present, cryptocurrencies such as bitcoin are gaining amazing value and are expected to become global currencies in the future. They have all the advantages over the common form of currency, but what they lack is the approval of governments around the world and the accompanying regulation.
It’s not easy. Bitcoin, to some extent, is designed to transfer the power of existing with popular banking institutions to the people. Decentralized maintenance and trading achieve the same result, but it is this nature that makes bitcoin difficult to be regulated.
Since its inception, cryptocurrency has been a useful tool for the black market. This is because bitcoin and similar options support secure, anonymous or pseudonymous transactions. It’s almost impossible for anyone to link them back to their account.
As a result, these countries find it difficult to regulate the cryptocurrency market, which operates in the shadow. Any reluctance to legalize bitcoin or other cryptocurrencies stems from the inability to do so, not from the lack of will itself.
But that doesn’t mean cryptocurrency can never be regulated. Several of these areas of development are limited in the real world simply because of the lack of a legal framework. The technology of self driving car is one of them.
That doesn’t mean autopilot cars will never be on the road. This technology has begun to appear in a prominent form, and it is expected that it will only be adopted more in the next few years.
In all probability, the use of cryptocurrency and bitcoin will see a similar situation in human evolution. Once regulation supports all the purposes of these currencies as legal forms, nothing can stop bitcoin from ushering in a new financial era.
Bitcoin future value prediction
Bitcoin is becoming scarcer than gold
Bitcoin has been the most successful investment in the history of the world. Nothing has grown from zero to $1 trillion in 10 years.
Gold is a kind of wealth reserve, because it grows by 4% every year. Today, bitcoin is growing at an annual rate of 4%. Two years later, bitcoin’s annual growth rate is only 2%. So the scarcity of gold and bitcoin is the same now, but in two years, bitcoin will be twice as scarce as gold.
The supply of bitcoin is halved every four years. We see that the price of bitcoin increases 10 times every time it is halved. From $100 to $1000, from $1000 to $10000. Now, we’re going from $10000 to $100000. In four years, that is, six years from now, we expect it to increase from $100000 to $1 million. After that, if the attribute of scarcity works correctly, we can increase it from $1 million to $10 million.
So far, only hedge funds and Elon Musk type characters have invested in bitcoin, while the real money is far away from bitcoin.
Real decision makers, the people who control the world’s real wealth, including large pension funds and other large institutional investors, are starting their due diligence. As time goes on, they will start investing, and cryptocurrency will usher in explosive growth.
It will take a while for big companies to step in. But it’s not a lack of interest. This is because bitcoin, as a digital asset, is not in line with their investment policy at present. They need to review internal regulations and due diligence before they can start deciding whether to invest.
This is also one of the main reasons why bitcoin has not yet had a bubble. You know, when everyone owns it, it is a bubble. But now, the world’s largest pension fund doesn’t own it. So we still have a long way to go. It took pension funds 10 years to start using email. So I understand it took pension funds more than 10 years to use bitcoin. “
It’s good news for ordinary investors that big institutions have yet to get involved in bitcoin, because the price of bitcoin will reflect that. Big companies can buy bitcoin for $1 million, but it may be too late for ordinary investors.