Bitcoin Primed To Become The New ‘Sound’ Money
recent, Prince Philip KaragoljevicThe hereditary prince of Serbia and Yugoslavia stressed that BTC is the only cryptocurrency with the potential to “fix” money. From his perspective, money is inherently corrupt, and altcoins trying to imitate Bitcoin are just another example of this desire to “create” money from scratch.
While some may disagree, calling his view another dose of “hopium” designed to push up BTC’s price, Bitcoin is rapidly embracing all the qualities it needs to be a “sound” currency.Every Thomas Jordan According to the Swiss National Bank, “Money is sound when its value is stable, so it is able to perform its functions as a medium of exchange, unit of account and store of value. Sound money creates security and trust, which in turn Come and promote social harmony and cohesion.”
While it’s premature to call Bitcoin a “stable” or a “store of value,” it has fulfilled all the other sound money boxes needed to be a trusted form of money. Most importantly, as a scarcity and deflationary concept, it cannot be overstated by central banks like regular money. While this alone should sway BTC skeptics, especially given the backdrop of high inflation and its societal implications currently plaguing policymakers around the world, other contributing factors are making this sound monetary transition possible.
Data Don’t Lie, Confidence in Bitcoin Is Climbing
Although it may be known for its price volatility, Bitcoin adoption continues to achieve new milestones in its adoption.One polls The report by Forrester Consulting on behalf of AAX highlights the momentum of Bitcoin adoption, highlighting that Bitcoin adoption and awareness have grown significantly in emerging markets in Africa, Latin America, Southeast Asia and the Middle East since its all-time high in 2021.
Interestingly, users from Southeast Asia and the Middle East are embracing BTC as a means of money management, using it as a source of future savings and as a hedge against potential losses on other investments. By contrast, most users in Africa and Latin America use BTC as their primary method of sending and receiving payments.
This changing reality is also evident from the accumulation of small wallets. number Glassnode, an on-chain data aggregator, reiterated this, “Over the past few months, shrimp accounts (wallets holding less than 1 BTC) have seen a massive increase in BTC accumulation. Initially triggered by the Terra implosion, they are now accumulating around 156,000 BTC. .”
Chainalysis Global Cryptocurrency Adoption Index Report Noting that in the year from July 2020 to June 2021, Bitcoin’s global adoption rate has skyrocketed by nearly 880%. Due to increased adoption, a wave of merchant stores and outlets are accepting bitcoin as a payment method, further expanding the use of traditional tokens as a medium of exchange. One of the keys to unlocking Bitcoin’s full potential as a payment channel is embedded in its design: segmentation.
Perfectly miniaturized unit of account
Bitcoin critics make fun of Bitcoin’s inaccessibility by noting the high price of a coin. However, this ignores the fact that Bitcoin already has an embedded unit of account measurement that exceeds the corresponding capacity of fiat currencies. The inability to subdivide modern money into more than two decimal places for real-world everyday use is a problem that Bitcoin easily overcomes with its Satoshi standard.
A Satoshi (the smallest unit of Bitcoin) is 1/1,000,000 of a Bitcoin, and it’s easy to get even at today’s BTC value. This factor alone is enough to encourage wider daily use of Bitcoin, as highlighted by the fact that platforms including AAX, OKCoin, Bitfinex and Coinmarketcap have adopted the Satoshi (SATS) standard.
Therefore, the use of SATS to break down BTC into the smallest possible units is driving the expansion of micropayments using BTC. As a result, many stores, stores, and brands have started accepting BTC payments, adding momentum to mainstream adoption.
Now, with the combination of smart contracts, sidechains, and L2 payment networks, Bitcoin’s underlying utility is also increasing, and functional improvements to legacy network infrastructure will also help bring greater user value and physical adoption to users.
It’s time for Bitcoin to live up to its ‘digital gold’ moniker
Overall, characteristics such as rising adoption, increased payment usage, and improved accessibility present new opportunities for Bitcoin to fulfill its role as a sound money. Of course, labelling Bitcoin as a store of value is still hard to argue given its price volatility, but evaluating it against the backdrop of rampant money printing and the high inflation currently surrounding the world calls for a stronger, apolitical currency The justification for alternatives is up.
National-level adoption of Bitcoin around the world, especially in emerging markets, and mass adoption at the individual level in countries suffering from high inflation and hyperinflation will be key catalysts. However, with developing economies facing similar challenges, Bitcoin could replace the desire to create money from scratch.
In addition, the Bitcoin network has gradually entered the DeFi space. This is helping BTC shift its narrative from “store of value” to “assets with yield.” On top of that, the limited availability of BTC also helps position the coin as a powerful hedge against inflation. According to reports, Bitcoin has been moving in the opposite direction of the dollar since early 2022. Historical data shows that whenever the dollar falls, cryptocurrencies tend to rise. Since BTC is the largest cryptocurrency by market cap, there is a good chance that the next drop in the dollar will trigger an increase in its value.
Bitcoin is scarce, as is gold or any other precious metal. In this context, it is important to understand that neither precious materials nor Bitcoin have any intrinsic value, but are valued according to their scarcity, further evidence that Bitcoin is replacing gold and other metals as markets continue to digitize strong reason.
(Reuben Jackson is a blockchain security consultant and crypto writer.)