A naukri.com initiative
Blockonomi
1M
198
Image Credit: Blockonomi
Op-Ed: Analyzing Bitcoin’s Shift from Electronic Cash to Global Asset
- Bitcoin was created as a peer-to-peer electronic cash system, and the word 'cash' appears in the Bitcoin whitepaper. Fifteen years later, Bitcoin has become a global asset and an asset class, and people want to hold it because it rises in value based on fiat currency.
- However, this vicious cycle of value appreciation means that people will not use Bitcoin as intended, as cash, and this is a problem.
- Crypto assets have become a problem for digital cash, which is the foundation of any financial system. Cash is used to value assets, and people cannot spend real estate at the supermarket.
- Crypto ETF inflows remove supply from the market, and there is no crypto central bank to regulate it. This means that the less supply there is, the greater the price swings, especially when there is increasing interest in assets.
- Cryptos should have been used as cash, but instead, they have become assets that are highly leveraged to global liquidity flows, creating growing security concerns.
- Stablecoins are a huge force in global payments, and they allow nations to trade without using the US-controlled financial system.
- However, there is a dark side to stablecoins. They are easy to monitor and freeze, and there is a growing demand for USDT, which is a defacto demand for US debt.
- Central Bank Digital Currencies (CBDCs) are coming, and they will further disuse cryptos as a currency. By contrast, cryptos will forever remain a volatile asset on the edge of the macro liquidity ecosystem, unless they can fulfill their goal of being a peer-to-peer electronic cash system.
- Cryptos were supposed to empower decentralization and create a global economy of peers, but now Bitcoin and other cryptos are locked away as assets for those who have them.
- Bitcoin was not designed to create wealth via price appreciation, but this is what it has become – a speculator’s dream.
Read Full Article
11 Likes
For uninterrupted reading, download the app