Bitcoin can be transferred globally in about an hour for a minimal fee, without any government or bank involvement
Bitcoin’s ability to be transferred easily without a middleman could position it as the “new gold”, according to experts speaking at the Bitcoin Mena Summit in Abu Dhabi on Monday.
But while they agreed that Bitcoin has many advantages over traditional money, they also warned that several challenges stand in the way of its widespread use as a global payment method.
“I think gold is better money than pretty much everything that has ever existed, except for Bitcoin,” said author Saifedean Ammous. “However, it does have this fatal flaw: it’s very difficult and expensive to move around in a modern digital economy, which means that you must resort to centralised services for moving it around. This makes it relatively easy for governments to confiscate it and to neuter its monetary role.”
His views were echoed by fellow panellist Rahim Taghizadegan, CEO of tokenised platform Deedsats and economics professor. “Bitcoin has the superior technical properties for monetary usage,” he said
Bitcoin, created in 2009, is a digital currency that operates without a central bank. Its supply is fixed, and it can be transferred globally through a decentralised network.
Where gold failed
According to Rahim, gold didn’t fail on its own, but people and governments caused it to fail. He pointed out that at first, merchants chose gold as money because it was easy to measure and verify. However, when countries tried to set fixed exchange rates between gold and silver and governments tried to freeze the ratio, it broke the system. “As economists, we know that prices are never fixed,” he said. “There’s always volatility.”
He said that all subsequent gold standards made things worse, as people could only redeem paper money for big bars of gold. This meant ordinary people couldn’t afford the bars and pushed control of the yellow metal toward governments and big banks. “This could happen to Bitcoin as well if it were centralised completely,” he warned.
Saifedean pointed out that the biggest failure of gold was the cost of transporting it. “Moving a bar of gold across borders can cost around 1 percent of its total value each time,” he said. “So you move the bar around 100 times around the world, and you’ve eaten the cost of the whole bar.”
He said that because of this, people historically relied on banks and governments to store and transfer gold on their behalf. That dependence opened the door to centralisation, confiscation, and manipulation.
The Future of Bitcoin
Bitcoin, Saifedean argued, solves many of these problems. It can be transferred globally in about an hour for a minimal fee, without any government or bank involvement. Anyone with a phone and internet connection can use it. “It’s very difficult for governments to stop you from using Bitcoin,” he said. “If they compromise its properties, people have the option to exit.”
Despite being bullish about the future of Bitcoin, the experts agreed that the cryptocurrency was nowhere close to replacing paper money, also known as fiat currency. “Ultimately, there’s a limit on how many on-chain transactions happen on Bitcoin,” said Saifedean. “Currently, it’s around maybe half a million transactions a day. So, if everybody wants to buy their coffee and groceries and cars and homes on-chain, then there is enough space on the Bitcoin blockchain for one tiny neighbourhood in Abu Dhabi.”
This reality means Bitcoin will require second-layer systems to scale – solutions that may introduce the same centralisation risks that ultimately weakened gold.
Source: www.khaleejtimes.com