Bitcoin is a virtual currency that does not rely on the central body of accounting, but is a completely open, peer-to-peer network for money that has no equal in the history of the human economy. But are people, their representatives and businesses ready for this new form of currency?
In some places and countries, bitcoin may take off earlier than expected, depending on the political climate. If the government destroys and lands its currency, it will definitely increase. This is what happened in Argentina when the government converted bonds denominated in local currency into bonds denominated in US dollars, at the exchange rate set by the government. After that, the use of bitcoins in the country has made its way through the roof, and it is still accelerating (measured in terms of wallet load per month).
Cyprus was another good example – when the government tried to seize people’s money, bitcoin soared in the country, as it is much more fluid worldwide and can be instantly sent to another person anywhere in the world without government intervention. It also means that in reality the government cannot control the supply and demand of bitcoins within its borders.
Of course, bad management is only one side of the equation. The economy dictates otherwise. Bitcoin takes off in places that thrive on entrepreneurship and where politics are favorable. Business owners find the use of bitcoins incredibly more efficient than the world’s existing credit card-based payment system because merchants have to pay credit card companies 2 to 4%. If all transactions were exclusively in bitcoins, without any conversion to fiat, then the transaction fee for the business is zero. Literally zero. You can send and receive money for free through the Bitcoin network. This is what makes the economy of using bitcoin so powerful.
Some cities that are ahead of this innovation include familiar names such as San Francisco and New York, but also lesser-known business cities such as Berlin, which has a huge thriving bitcoin market.
If residents of a city or country view bitcoin as a stock of value and at the same time view it as a payment system that reduces the current burden on traders, bitcoin can take off. This has happened in the past, and it is likely to happen in the future. Sure, you always need the entrepreneurial spirit and risk to deprive the power of decades that exist, but the good news is that it’s happening simultaneously around the world.