Can Bitcoin die?

I’ve been thinking a lot about this question, the question of whether or not Bitcoin can die. And in a broader sense, can Cryptocurrencies die? Now that pandora’s box has been opened, can it be shut? 

When I first starting thinking about this one thing struck me. 

We live in a digital world. There have been many reports that on average a person in a developed country spends upwards of 8-10 hours a day using some form of technology. Be it while working or during leisure time. Our mobile phone, laptops & tablets have become an integral part of how we live our lives. 

And for this reason it’s entirely conceivable that we need a digital currency to better suit how our lives have developed. The reason physical currency persisted for so long was because transactions were, for the most part a physical interaction. But hold on, how is a cryptocurrency better than a digital manifestation of a FIAT currency? The largest issue with a digital FIAT currency is exchange rates. Consider a simple transaction where I, living in the United Kingdom purchase an album from a Ukrainian rock band. The payment is processed very easily but it’s the exchange rates between the two currencies that start to dissolve the efficiency. A cryptocurrency can exist in a world where a universal world currency simply can’t. 

Now we have to pay tribute to the blockchain here, as without the advancements in cryptography and processing power, a digital (crypto) currency couldn’t work quite so successfully. The blockchain and it’s accountability is what allows for such a borderless idea to survive. The blockchain doesn’t have to consider international politics and is incognisant of language barriers. So although the idea for a digital medium of exchange isn’t a new idea, it’s the cumulation of technology and buying habits that has turned a hypothetical, into a reality. 

Bitcoin specifically isn’t currently a very good medium of exchange. This is mostly due to it’s volatile nature. You see a currency exists to elevate the double coincidence of wants, allowing an economy more flexibility over a barter system. Ignoring all the additional layers of complexity we’ve created around our financial system, the purpose of money is to allow the freedom for products and services to be exchanged easily. With Bitcoin however, the amount required to purchase a cup of coffee one day, could buy you ten the day after. This has lead to Bitcoin being used as a store of value instead of a medium of exchange. The comparison between Bitcoin and Gold is a very interesting topic, and one for another day. 

There are however other ‘alt’ coins available, many of which aim to avoid the pitfalls Bitcoin has found itself in and become a fully fledged global currency. One of the biggest barriers for Bitcoin is the very nature of the code it’s built on. Currently the Bitcoin network can process around 4-5 transactions a second, compare that to Visa who can process on average 1667 per second. Many of the alt coins have this specific target in mind and I believe the blockchain technology will quickly develop to surpass the capabilities of Visa or PayPal. Despite the current shortfalls in processing speeds, the blockchain does have a huge benefit when it comes to transaction fees. Western Union is the largest remittance transfer in the world, processing $500 billion each year. But with a transfer of $900 you’ll be stung with a $76 fee! The same transfer on the blockchain would be a fraction of that amount. And with a large portion of Western Union remittances coming from some of the poorest countries in the world, I see it as a moral obligation to offer an alternative. 

So could Bitcoin die? in short, yes. But the real questions is can Cryptocurrencies die? In my opinion, no. As long as the digital landscape continues to pervade over the way we live our lives, so will a medium of exchange (or store of value) that reflects that. Whether it’s Proof of Work or Proof of Stake, there is real value being generated through the use of technology. Bitcoin is just a small part of a much bigger picture. As of right now it may preside over the alternatives but it must continue to develop and meet the needs of it’s users to stay there.