Bitcoin is going to become the mainstream form of payment and replace fiat in the coming decade as it already fulfills one of the three fundamental roles of traditional fiat money, reports the recent study by eToro and Imperial College of London.
Bitcoin to replace fiat money
Currently, the entire cryptocurrency market has been red. The total market cap came down to $250 billion and in the past 4 days, about $30 billion have been lost from the market. The world’s number one cryptocurrency Bitcoin has dropped down below $6,400 price level, losing over 65 percent from its all-time high.
Though the prices tanked hard the experts believe Bitcoin can reach its all-time of $20,000 by this end but before reaching that level, a severe drop down is inevitable. However, today bitcoin saw some relief as it went above $6,400 mark. Talking about the future of Bitcoin, the new research from eToro and Imperial College London states that cryptocurrencies are already fulfilling one of the three main criteria of fiat money.
As per the official statement, “Bitcoin offers a viable evolutionary “next step” for money” and it has the potential to become the mainstream form of payment in the coming decade.
Professor William Knottenbelt from Imperial said:
“There’s a lot of skepticism over cryptocurrencies and how they could ever become a day-to-day payment system used by the man on the street. In this research, we show that cryptocurrencies have already made significant headway towards fulfilling the criteria for becoming a widely accepted method of payment.”
Bitcoin fulfills “store of value” role
Dr. Zeynep Gurguc from Imperial College Business School and Professor William Knottenbelt from Imperial College London argues that it already fulfills one of the three fundamental roles of traditional fiat money which is a store of value.
The three roles are a store of value, medium of exchange and unit of account. The study explains in order to fulfill the other two roles, bitcoin need to overcome scalability and regulation like challenges.
The UK Managing Director of eToro, Iqbal V. Gandham who commissioned the research, stated:
“Perhaps the thing that will ultimately tip cryptocurrencies into the mainstream is the issue of cross-border payments. These remain difficult and expensive in many cases. Cryptos are cross-border by design, enabling wealth to be transferred far more easily. The potential for this to be a leading use case looks very strong.”
Money has evolved over the time, the recent one in which is mobile and contactless payments. But despite this change, three core functions remain the same. It further points out that “each evolutionary stage of money has brought about a reduction in payments friction.” So, in order to reduce friction in the global economy, cryptocurrencies are the most natural step forward.
Dr. Zeynep Gurguc from Imperial said:
“New payment systems (or asset classes) do not emerge overnight but it is worth noting that the concept of money has evolved – even in our lifetime – from cash to digital or contactless payments. The wider use of cryptocurrencies and crypto-assets is the next natural step if they successfully overcome the six challenges we set out in our report.”
The study also talks about the factors that bitcoin needs to work on in order to officially become a mainstream payment method which are scalability, usability, regulation, volatility, incentives, and privacy.
A computer science engineer, I have been adamantly following the blockchain and cryptocurrency industry for the past 2 years. A crypto enthusiast and hardcore blockchain follower. Reach out to him at [email protected]