One way or another, digital currency is in our future. Since Bitcoin’s blockchain launched in 2009, more and more converts have become purists and accepted the idea that a decentralized currency without an authority figure overseeing its use is not only a distinct possibility, but possibly the way of the future.
That being said, people who are truly sold on the idea of living off of Bitcoin or any other decentralized currency are still in the minority. Most people are comfortable using credit and debit cards nowadays for cashless transactions, and many more still will likely support the idea of a government merely doing away with paper money altogether and offering its citizens a digital currency alternative that is still tied to central banks.
Odds are most people will use the latter if governments make it easy to do so. But the real question is, what is the better bet in the long run? Is it going to be easier or more fruitful to use Bitcoin and decentralized currencies? Or is the average person just going to settle for using government money that no longer requires paper or coins?
Answering these questions requires taking a slightly deeper look at the evolution of money and the idea of transferring value between one another.
A Brief History on the Evolution of Money
Thousands of years ago, cavemen tracked value using sticks and stones. Centuries later, feathers, pelt, gold and silver, bartering, paper money and now digital money have taken place of those sticks and stones for brief moments in time.
The reality is that every form of value that humans have ever used is meant to be just that, a way to communicate value. Paper money by itself doesn’t have any value apart from the fact that governments and citizens agree that it has value. That is why a decentralized digital currency like Bitcoin has a fighting chance of replacing traditional money. It’s also more convenient to use digital money, than it is to stamp coins or print paper and monitor its distribution in the physical form. That’s why the digitized nation of government-backed money may also have a lot to say about the way we communicate value in the future.
The pros and cons of Government-Backed Digital Money
China’s federal government is already planning to expand on a pilot program involving turning the Chinese yuan into strictly a government-backed digital currency. It’s likely to take off given that the Chinese government keeps a closer eye on its citizens than almost any other country in the world. Add that to the fact that many Chinese investors pour their assets into Bitcoin as a way of escaping the eye of the government, and it only makes sense that China’s predominant way of exchanging value is inevitably going to be digital one way or another.
The upside of that is obviously convenience, but the downside is, when a government that is repeatedly questioned for violating human rights is in control. Could it be that the digital yuan will actually drive Chinese people towards Bitcoin?
The Pros and Cons of Choosing Bitcoin over Government Money
Whether you’re living under the watch of an oppressive government or not, Bitcoin is worth a gamble because it lets you be your own bank. Secondly, Bitcoin and most other cryptocurrencies control inflation algorithmically, meaning nobody can gain the system or devalue the currency. That’s the upside to it. The downside is if you lose your money, there is no bank, government or customer service hotline to complain to. The other downside is that widespread use of cryptocurrencies as day-to-day exchanges of value is still likely decades away.
Bitcoin is the Better Gamble
Bitcoin has to be the better long-term gamble. If anything, government-backed digital currencies will act as an on-ramp to Bitcoin. It will likely get gamblers and regular folk used to the idea of using currency in a strictly digital format, and not just through debit and credit cards, but even through USB keys or hardware wallets. Once people see that they can invest in a digital currency that can’t be devalued artificially by powers that be that have ulterior motives, it all makes sense to gamble on truly decentralized digital currencies.
Add to that the fact that Bitcoin and other digital currencies are already widely used through bitcoin gambling sites, institutional investing platforms, and in countries where inflation is running rampant, and it’s only a matter of time before Bitcoin increases both your freedom and your bankroll.
