Cryptocurrencies are recovering from the past few months, and their adoption is moving in the right direction with momentum all the time. According to a recent Chainalysis report
, global adoption of digital assets is up 880% year-on-year. Leading the way are emerging markets such as Vietnam, India and Pakistan. Sponsored
Given this high adoption rate, the cryptocurrency community is watching with interest to see if Bitcoin can become a globally accepted currency in the near future. This would be a huge milestone that many proponents are dreaming of. Already today, the Latin American country of El Salvador has made BTC legal tender
. But is it possible for Bitcoin to become the official currency of the world?
Can bitcoin become more than just a store of value?
between users with real ownership over their funds. With all this, no government oversight or intermediation is needed. Sponsored Sponsored
However, despite these advantages, most of us don’t use Bitcoin to settle our daily payments. And for a good reason. If you think about it, buying your morning coffee using BTC involves a rather tedious, inconvenient process for the customer. Moreover, it carries a huge risk for the coffee shop for the coffee shop.
In this hypothetical scenario, the customer would have to wait at least 20-30 minutes until their transaction
reaches 2-3 confirmations (Bitcoin’s block time is about 10 minutes). This is definitely an unpleasant experience for the consumer, but the merchant also bears the risk. After all, at the end, it may turn out that while waiting for confirmations, the price of Bitcoin has dropped.
Accepting cryptocurrencies at the point of sale can also cause problems with banks and regulators. Not to mention transaction costs
, which when the Bitcoin network experiences a heavy load can rise to skyrocketing levels (as high as $63 in April 2021).
Bitcoin needs an efficient infrastructure
is why Bitcoin in its original form is not suitable for everyday payments. Instead, most people view and use BTC as a store of value. Why? Because of the limited supply
cryptocurrency and deflationary halving mechanism.
However, for Bitcoin to be used to settle everyday transactions and become legal tender worldwide, it needs an efficient infrastructure supported by third-party providers. This way, consumers could pay for products and services in BTC without facing the problems described above.
Furthermore, using a tier-2 scalability solution such as Lightning Network or a Bitcoin-based sidechain such as Liquid Network could create a more seamless experience for customers. This would allow them to conduct instant and cost-effective transactions in BTC.
And this is something that blockchain companies in El Salvador are working on. According to a recent interview with several local players, the Latin American country is piloting both Liquid Network and Lightning Network. All to create the necessary solutions for micropayments and digital bonds.
What does the industry need to do?
As we mentioned earlier, BTC in its original form is not suited for mass adoption in payment processing. At the same time, payment-optimized cryptocurrencies such as Ripple(XRP) and Stellar (XLM) offer cheap, fast and efficient transactions for users. However, they lack the popularity and trust that comes with the Bitcoin “brand”.
For this reason, if any cryptocurrency were to become a global legal tender today, it would most likely be BTC. However, for this to happen, a more efficient infrastructure is needed.
To attract people who are not familiar with cryptocurrencies, the industry needs to start using a combination of user-friendly third-party services to settle everyday payments. Proper education is also key. Many people still believe that cryptocurrencies are pyramid schemes or are mainly used for illegal transactions. However, we all know that these are bullshit. Especially when you consider that in 2020, illegal activity accounted for just 0.34% of total crypto transaction value.
However, a significant portion of the world’s population has limited knowledgeThe knowledge about this asset class. Effective education will not only help dispel myths and misinformation, but also increase awareness about how to hedge your coins. Ultimately, this will lead to a change in consumer behavior. This is a key factor for Bitcoin to achieve mass adoption and potentially become a global legal tender.
El Salvador’s controversial experiment could be an example for other economies
Now let’s return to the case of El Salvador. There is a possibility that the Salvadoran government hurried by introducing the new law before developing the necessary infrastructure and educating its population of nearly 6.5 million people. Because such a bold decision could easily backfire, this approach carries significant risks for the country’s economy, which has thus far struggled with limited GDP growth.
However, while El Salvador is a small economy, if its experiment goes well, it could serve as an excellent example for other countries. If the scenario is favorable, smaller, remittance-dependent nations will follow in El Salvador’s footsteps.
Of course, major economies like the United States will not rush to accept BTC as an official national currency. This is because their nard currencies have a solid, established global presence.
In conclusion, it will still be a long time before BTC can potentially become legal tender on a global scale. And since the cryptocurrency market is an extremely intense area, there may be innovations that will change the course of events and take the industry in a completely different direction.
However, one thing is certain – cryptocurrencies will stay with us for a very long time. And as adoption of digital assets continues to grow, it won’t be surprising if the market sees new peaks by the end of the year.
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