Bitcoin has been operating as an alternative to gold, and majority of the people are using the currency for their investments rather than payments. Ever since BTC reached its all-time high at the end of 2017, people have had their hopes high for Bitcoin being a return for investment rather than transactional money.
The issue at the moment for Bitcoin is the lack of institutional involvement. Businesses haven’t yet explored the crypto space and hence there aren’t much payment options, in fact, they’re no way near to those of fiat. It is expected that once there is regulatory clarity, custody services are established and an ETF is granted by the SEC, a whole new world of opportunities would open up for crypto as a medium for transactions globally. But talking specifically about Bitcoin, would it still be treated like gold or would it become the leading transactional currency? Let’s look deeper.
Bitcoin, Gold or Transactional Currency?
Let’s analyze the basic traits of a transactional currency, the transactions should be fast, it should be secure, there should be low transactional costs, globally accepted, etc. Although BTC might be able to check most of the boxes of the future transactional currency, there are still points where it lags big time. Zach Alam, the Chief blockchain consultant at onboard.one explained how Bitcoin wouldn’t be able to become a transactional currency and would remain an alternative to gold. He stated, talking to BlockPublisher,
– It’s slow to send, at ~10 minutes to confirm – we can’t expect shoppers to wait that long before leaving a store with their products.
– There’s not enough throughput, at 7 transactions per second – it’s not feasibly possible for there to be widespread usage.
– There’s no way to recover lost or stolen coins, this might be fine for gold, or as a method to preserve wealth, but the majority won’t be able to live day to day with this risk.
Can’t we just update these things in a “future” version of the Bitcoin software? Maybe, but probably not. I’ve seen how difficult and political it is to make just the slightest change in how the system works.