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Implications of Bitcoin

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economics

(Rahul Kumar) #21

The price volatility of Bitcoin and other cryptocurrencies is one of the biggest barriers to widespread adoption that cryptocurrencies face today. Unlike fiat currencies, today’s cryptocurrencies do not have a central bank that implements monetary policy to keep purchasing power stable, meaning that changes in demand can induce massive fluctuations in price. If users cannot be sure that the purchasing power of their accounts will remain stable, they will never adopt a cryptocurrency as a medium of exchange over a price-stable alternative.

For example, imagine paying someone a salary of 1 BTC per month—if the price of BTC dropped, they might go hungry!

So the major flaw that Bitcoin has is actually its USP i.e it’s Non-Fiat currency. Which means that the quantity of Bitcoins remain fixed in the system while the value skyrockets with increasing demand.

This will soon diminish due to advent of other more practical cryptocurrencies like Ethereum and Basecoin. But Bitcoin has to be credited for their invention.

On a broader picture, YES cryptocurrencies are here to stay due to advancements in BLOCKCHAIN and Cryptography. It’s the INTERNET analogous of NETSCAPE era and we are lucky to witness the change !!