[The future of money: Bitcoin emerges as a disruptor, but CBDC dominates]
"A pure peer-to-peer electronic cash system" is Satoshi Nakamoto's definition in the Bitcoin white paper. Bitcoin has captured the attention of tech enthusiasts, consumers, traders, investors and regulators. In addition to Bitcoin, there are tens of thousands of other cryptocurrencies, some developed for specific purposes and others based on internet jokes.
El Salvador and the Central African Republic believe Bitcoin has this potential and have classified it as legal tender. However, the situation is different in other countries, especially developed countries.
Fiat currencies, such as the U.S. dollar, euro or yen, are issued by central banks and are protected by law and supported by governments. In contrast, cryptocurrencies are decentralized and not backed by any centralized authority. Satoshi Nakamoto's purpose in creating Bitcoin was to create an "electronic payment system based on cryptographic proof rather than trust" that was beyond the control of any central bank or government authority. The blockchain based on proof of work ensures the security and irreversibility of transactions.
Ancient economies were based on barter, followed by tokens and paper money. Trust in modern fiat currencies is based on government guarantees, while cryptocurrencies rely on decentralized trust mechanisms. However, people still need to accept and trust cryptocurrencies in order to replace fiat currencies.
Technical challenges of cryptocurrencies include cross-border payments and anti-inflation advantages. Blockchain-based cryptocurrencies can reduce the intervention of intermediary banks, reduce costs and improve efficiency. Many blockchain companies such as Ripple are already offering this service.
However, Bitcoin’s value is highly volatile, making it more of an asset than a means of payment. Decentralized payment methods also weaken central bank control. Additionally, Bitcoin’s infrastructure cannot handle large-scale payments, resulting in network congestion and high transaction fees.
Global regulators tend to view Bitcoin as an asset rather than a means of payment. Although cryptocurrencies are less likely to become mainstream payment methods, the potential of blockchain technology has been recognized. The concept of stablecoins is considered promising, but a lack of regulatory clarity has hindered its acceptance in the fiat currency world.
