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Can Bitcoin Be a Mainstream Medium of Settlement?

Avatar newsbtc 5 years ago

There are many ways to make use of bitcoin – from profiting from its price fluctuations to using it as a means of fund transfer or remittance. However, the cryptocurrency still hasn’t become a main mode of payment or medium of settlement among most merchants and establishments. Can it really achieve mainstream adoption?

One major issue is that the price volatility of the currency makes it a less acceptable store of value, which then makes it a challenge to conduct transactions using bitcoin. Over the past year, price has plummeted significantly, making a unit of bitcoin have a much lower purchasing power compared to a few years back.

Bitcoin as Store of Value

If bitcoin can’t maintain its value, then many are worried that it could become worthless later on and not useful in any kind of transaction at all. “For bitcoin to become money,” says Noah Smith, “it has to figure out how to massively reduce the volatility of bitcoin prices of goods and services.”

Scanning the long-term charts of bitcoin reveals that volatility has declined in the past months as well. This has led to more stable trading conditions, with price slowly falling compared to the sharp drops seen in the past.

Industry experts say that this has been a result of a growing market and bitcoin ecosystem, which is good for the cryptocurrency. Further developments in the field could lead to even more price stability, which could keep prices stable enough to hold bitcoin for much longer without worrying about losing its value.

Of course there could be market factors that could usher in an increase in volatility once more, such as the introduction of ETFs and CFDs that could allow investors to trade bitcoin. Speculative trading could push prices around and lead to volatile price swings again.

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