As the blockchain technology behind cryptocurrency matures, we’ve gradually seen more industries integrating Web3 infrastructure and cryptocurrency. From finance, to pharmaceutical and real-estate. Even major tech companies such as Tesla have begun accepting Bitcoin. Not long ago, it seemed impossible that cryptocurrency could replace traditional paper currency, but now, that reality doesn’t seem all that farfetched.
El Salvador Embraces a Crypto Future
El Salvador has already taken a major leap forward, becoming the first country to accept Bitcoin as legal tender. Could El Salvador’s decision to accept Bitcoin as legal tender lead to cryptocurrency replacing fiat currency on a nation-wide scale? Experts are divided.
What The Experts Are Saying
Bitstamp CEO Julian Sawyer is skeptical of cryptocurrency’s potential as a standard means of exchange. He believes centralized banking isn’t about to go the way of the dinosaur just yet. Rather, Sawyer suggests that cryptocurrency could be used as the infrastructure to support faster and safer trade of traditional currency.
Even the President of El Salvador’s national bank admitted that Sawyer words hold water, saying that the country had no plans to replace the bank with cryptocurrency.
What’s Holding Bitcoin Back?
Bitcoin has proven to be incredibly volatile. Last year the cryptocurrency quadrupled in value. This year, it crashed by 50%. While the America Dollar certainly has its own ups and downs, Bitcoin’s value can plummet after a single tweet by Elon Musk. Most investors have started to believe their money would be safer in more stable assets.
Bitcoin Versus The World
When compared to other fiat currencies, Bitcoin can’t offer the stability necessary to function as a standard means of exchange. The Brazilian real and Turkish lira are two of the most unreliable fiat currencies in recent history, yet even they offer greater stability than Bitcoin.
What Happens Next?
It’s difficult to predict Bitcoin’s long term future. Will the cryptocurrency prove more successful as legal tender in El Salvador? Possibly. It’s more likely that El Salvador will act as a lesson on what not to do, for economists, governments, and investors. It’s important to remember that Bitcoin isn’t the be-all and end-all of cryptocurrency. Even if Bitcoin fails to function as a standard means of exchange, there’s still a very real possibility that we’ll see another cryptocurrency replacing fiat currency eventually.
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