Cryptocurrencies were introduced to the world a decade ago and since then, the popularity and demand for cryptocurrencies among people have increased gradually. A survey conducted by ING Bank revealed that a majority of Europeans were quite bullish for the future of cryptocurrencies. About 41% of respondents hope for a bright future for cryptocurrencies.
There were a total of about 15,000 respondents in the survey. While 41% shared bullish thoughts about cryptocurrencies, 23% of respondents had low expectations for digital assets whereas, nearly 32% of respondents expected bitcoin and other cryptocurrencies to become a mainstream online payment option.
In the current financial system, fiat is the only currency that is considered as a reliable payment option in stores. Whenever cryptos like bitcoin are predicted to match fiat’s adoption level, a debate comparing both types of currencies is triggered.
To explore subtle differences between two extremes, BlockPublisher inquired the dominating attributes of bitcoin over fiat from Lindsley Medlin, founder of the NJ Blockchain Center. To this, Medlin replied:
Bitcoin is a hedge against inflation because the monetary policy is fixed in the core code. No one can arbitrarily mint more bitcoin and devalue it. The creation of new bitcoin is predetermined and everyone knows it and can plan based on it. In some countries like Venezuela or Iran, bitcoin is desired as a hedge against inflation.
Hedge funds are alternative investments that use pooled funds and employ different strategies to earn active return, for their investors and bitcoin, according to Medlin is a hedge against inflation. There is no authority that can manipulate and make more bitcoin like in the case of central banks.
The survey also enlightened that 63% of respondents were aware of the volatility traits possessed by cryptocurrencies. Besides knowing that the value of cryptocurrencies saw rapid changes, a large majority i.e 73% also knew that cryptos are categorized as digital assets.
Often criticized for being extremely volatile, cryptocurrencies are still a better alternative to the fiat. Summarized comprehensively by the founder of the NJ Blockchain Center:
When central banks and governments print more fiat money it causes inflation by devaluing the currency. Fiat isn’t a viable option to counter inflation if it is the cause of inflation. In some instances, a more stable fiat like the USD could be a hedge against the devaluation of other currencies like the Venezuelan Bolivar. This is why people in many countries try to obtain USD as a way to hold their savings.
This shows that as fiat currency is a printable entity under the control of banking systems and can never innovate the current financial system. Moreover, according to other findings of the survey, about 51% of people interviewed, believe that cryptocurrencies are commonly accepted at departmental stores. Apart from that, 27% of the total respondents thought that cryptos are controlled by some central authority whereas, 44% didn’t hold any idea about the relation of cryptocurrencies with authorities.
After analyzing the results, light was shed on the current situation. It is suggested that people lacked important knowledge related to cryptocurrencies. While most generic details such as digital nature of cryptos were crystal clear, people have false beliefs regarding the adoption of cryptos. For instance, at the moment, there are very limited stores that accept bitcoin or other cryptos.
Furthermore, a majority of respondents weren’t aware of the way cryptos work. Many people still didn’t know if cryptocurrencies are controlled by some authority or not. This means that the differences between bitcoin and Facebook’s Libra cryptocurrency are incomprehensible to majority.
Bitcoin, the world’s first decentralized cryptocurrency, is not controlled by any government, authority or institution. Therefore, bitcoin price is dependent only on the fundamentals of supply and demand. In contrast, Libra Association will control Facebook’s stablecoin. Although Facebook itself would not able to influence Libra, members of Libra Association will possess decision-making power. Therefore, Libra, quite different from bitcoin, is centralized crypto, controlled by a governing body.
Despite having the basic level of knowledge regarding cryptocurrencies, Europeans were deprived of the true essence of cryptocurrencies, especially the world’s largest cryptocurrency by market cap, bitcoin. To understand what distinctive propositions are offered by cryptos, one must understand the flaws of the current fiat and banking system. Enlightened by Medlin;
While bitcoin is more volatile than the USD at this point in its evolution, it is a good option when USD are hard to obtain due to restrictions in a particular country. Over the long term, bitcoin can also be a hedge against the devaluation of the USD, which has lost about 95% of its value over the past one hundred years.
Although people are generally aware of cryptocurrencies and are optimistic about the future of digital assets, they are indeed missing out the bigger picture.