Uncertainty of digital currency
By now, I guess all of you have heard of bitcoin and other cryptocurrencies. Apparently, they are set to take over and revolutionize the financial sector. By that I mean how the transactions are conducted and recorded. Lot of economists predict that this would invite government regulations as digital currency might outdate the fiat currency. But before going all the way over there, one should question the credibility of digital currency.
Here is a small example. I want to buy a product online. I use bitcoin because the transaction is faster and cheaper than the traditional transactions conducted by the banks. Bitcoin futures makes this exchange secure using the smart contracts. Everything is good and fine. But if the price of bitcoin rises the next day, it means that the bitcoin I exchanged with the seller is worth more today than it was yesterday
This incredible price volatility makes it hard for the society to accept bitcoin as a currency or a better form of fiat currency. This is the primary reason why most of the stakeholders in the economy consider bitcoin as a store of value instead as a form of exchange. This raises a serious question. Is bitcoin an asset which is not backed by a real value? Think through!