Can Bitcoin Replace Dollars and Rupees?

Are you questioning the possibility of Bitcoin replacing dollars and rupees? Here is a guide on whether this virtual asset can replace dollars and rupees.

Unlike traditional currencies like the dollar and rupees, Bitcoin is decentralized, meaning the Central Bank does not control it. Therefore, it is safe to say that this digital money is a currency of the people for the people. Fiat currency, on the other hand, has been around forever, and even though it inconveniences its users, fiat currency has a stable value. Bitcoin’s creation was in response to the 2008-2009 financial crises and as an alternative to conventional cash.

Financial experts claim that this digital asset is the future of money, but it is the present. However, this virtual asset is here to stay and rule. Also, most people believe that as more and more entities purchase this digital currency, its value will continue to increase, becoming an alternative to conventional money. Here is why Bitcoin cannot replace dollars and rupees.

Bitcoin is a Store of Value and Not Currency

Despite many people in various countries adopting this virtual asset, governments of different countries may not accept this digital asset as a means of payment. Countries like China have imposed bans and restrictions on their citizens from trading this virtual money. The Indian government also planned to ban this digital asset completely. A country’s economy depends on the government’s control over funds through fiscal policies.

Ultimately, the government decides the amount of currency to print due to internal and external pressures. Nevertheless, Bitcoin has a hard cap limit of 21 million, meaning only those coins can exist. Miners have produced 19 million Bitcoins, leaving 2 million Bitcoin in circulation.

Eventually, Satoshi Nakamoto created a currency independent of financial institutions and government regulations. However, decentralizing this electronic asset would enhance transactions involving illegal activities such as tax evasion, money laundering, and many more illegal activities.

Lack of a Stabilizing Force

The government issues conventional currency and defends it vigorously. Central Banks go into the international financial markets to carry out market operations that involve buying and selling their national currencies to stabilize their values since money cannot function without stability. On the other hand, this virtual asset is notoriously volatile, which makes it a terrible currency.

Most people purchase this digital money via exchange platforms like BitProfit as a speculative asset but not as a medium of exchange. As a speculative asset, you hope that the value of this digital money will increase with time, so you are unable to buy something using this digital asset. In addition, vendors cannot accept Bitcoin payments because they fear their value will decrease in a few days.

Bitcoin Has no Real Value

Many financial experts claim that traditional currency does not have any value, which is false because fiat money has the value of the guarantee that issues the currency. In addition, the government can impose taxes on its citizens and businesses, issue bonds, and sell public assets. Therefore, due to the authority that the government has over conventional currencies, it gives the people the confidence that the value of the money will be there and is stable.

What’s more, stocks have value due to the ability of companies to sell goods and services and make profits. On the other hand, Bitcoin’s only value is if another person is willing to pay the price for the digital asset. Therefore, it is pretty challenging to determine the value of Bitcoin.