Can Bitcoin become a new world currency?

Bitcoin is a cryptocurrency and the first decentralized digital currency, operating without a central bank or administrator. The network is peer-to-peer, and transactions occur directly between users, without intermediaries. Bitcoin is completely decentralized and has a finite supply, similar to gold. Currently, approximately 17 million Bitcoins have been mined, with a total of 21 million Bitcoins allowed within the system. According to estimates by Chainalysis, over 3.5 million Bitcoins are now permanently lost and will likely never return to the market. These coins have not moved for years and are therefore considered lost.

Bitcoin as a Payment Method

Although Bitcoin is not yet a legal tender in the Netherlands, it can be used to make purchases at various places. It is possible to pay with Bitcoin at major online shops like Bol.com and Zalando, and even at The Silver Mountain, where you can purchase precious metals with cryptocurrency.

In a recent analysis, experts from JPMorgan, the largest investment bank in the world, suggested that the price of Bitcoin could reach $45,000 this year. However, according to experts, there's a catch: Bitcoin must first behave more like gold.

It must be accepted by traditional investors as an investment instrument similar to gold. Banks, as well as large corporations like Tesla, are starting to buy Bitcoin. In addition to Tesla and major banks, hedge funds—the world's money managers—are also getting on board. Moreover, it is becoming more common to make online purchases with Bitcoin, indicating that the crypto market is unlikely to disappear anytime soon.

Bitcoin transactions are not only globally tradeable, but they also do not incur banking or transaction fees. Additionally, as mentioned earlier, the number of Bitcoins available is finite. Unlike fiat money, Bitcoin cannot be printed at will. Purchases made with crypto are discreet unless the user chooses to make them public. International payments are also not subject to high transaction fees and are processed much faster. In this regard, Bitcoin seems like the ideal replacement for fiat money, but its price is highly volatile. Whether Bitcoin will become the new global currency is difficult to say, as long as banks and regulators have no control over it.

El Salvador

Nevertheless, Bitcoin is already being used as legal tender. In September 2021, El Salvador became the first country in the world to adopt Bitcoin as an official currency. The decision by Nayib Bukele, the president of El Salvador, faced much criticism, which intensified as the price of Bitcoin fell last year. However, progress is being made with Bitcoin adoption. The tourism sector is one of the main drivers of the country's growth; a study from late last year indicated significant growth in the tourism sector since the implementation of Bitcoin. Finally, in November 2022, the president announced that El Salvador would purchase one Bitcoin every day. With current prices, this has proven to be a profitable decision.

Disclaimer: The Silver Mountain does not provide investment advice, and this article should not be considered as such. Past performance does not guarantee future results.