What is the future of bitcoin?

2018 07 30 bitcoin

The future of bitcoin has been much discussed in the media recently, while various major names from the finance sector have expressed concerns about the volatility of the cryptocurrency created in 2008 by Satoshi Nakamoto. Will public interest in the new asset grow or peter out? Here are our thoughts...

Bitcoin is based on blockchain technology, a decentralised system to safely exchange data and financial transactions, share the information in an open ledger, and keep a time-stamped record of the transactions and data in a permanent and unaltered way.

At the risk of disappointing our readers, let us begin by confessing that it is difficult to predict what will become of the leading cryptocurrency in either the short or long term.
What we can say with certainty is that everything will depend on the use that is made of bitcoin.

There are three possible scenarios.

  • Scenario No.1: public interest will continue to be purely speculative and bitcoin will merely be seen as a financial asset. In this case, bitcoins will likely be exchanged for dollars, and the speculative bubble may burst.
  • Scenario No.2: bitcoin is used as a real transfer technology, to exchange value between individuals independently of traditional currency systems. In this case, bitcoin will not only stand the test of time, but also revolutionise our current economic models. In 2030, we may be able to exchange goods and services using bitcoin, without needing dollars, euros or yen.
  • Scenario No.3: bitcoin goes beyond its primary function as a cryptocurrency and becomes a platform to create smart contracts. Using bitcoin to create smart contracts rather than simply as a decentralised means of exchange will have various consequences on our social models, decentralising voting, tax systems, social aid distribution and traditional health insurance, to name a few.

While this last scenario is still being analysed , the second scenario is already a reality because bitcoin is currently used as a means of payment in many countries around the world. In Switzerland, a company was established using bitcoin capital. In Japan, bitcoin is accepted as a means of payment in 20,000 points of sale and is even used to buy apartments.
In Korea, it is even possible to obtain guarantees from companies in bitcoin. These uses remain marginal but are the first signs of a movement towards adoption.

While the use of bitcoin as a means to transfer value is growing steadily, what does this mean for the future of our world’s economies? Will peer-to-peer exchanges using bitcoin pave the way for a new economy or will they simply modernise our traditional economic models? Will the triumph of bitcoin provide us with the opportunity to completely rethink our current principles of sovereignty and governance and the role of other parties such as central banks? Or will the revolution be little more than “cosmetic”? Only time will tell. One thing is certain. The future and real value of bitcoin are linked to the advent of a new economy.

 

 

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