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Yet, not everyone shares this No such worries with Bitcoin bullishness. Why is that?
Well, as with all new (read: revolutionary) developments that seemed to have come out of left field, there are those that embrace it and those that reject it. The reasons for their particular choice are manifold. Skeptics come in two flavours:
1. People that are unable to fathom the benefits and world-changing potential
2. People that fathom the benefits and world-changing potential all too clearly and are aware that these may very well jeopardize their happy status quo.
But let's firstly look at Bitcoin a bit more closely. What's all the fuss about? And will it be our money of choice during Singapore's Smart Nation era?
Bitcoin is a digital currency, a.k.a. a cryptocurrency. As compared to regular so-called fiat currencies, Bitcoin offers a few radically new benefits that render it a much better payment system than the traditional ones we have today.
To wit, Bitcoin is underpinned by a global, public ledger called Blockchain. Essentially this is a dynamic database of all the Bitcoin transactions ever done that's shared by the countless computers ("nodes" in Bitcoin parlance).
Now, because each and every Bitcoin transaction - once it's validated - is added to the Blockchain and then shared by all nodes, it's as good as impossible to cheat the system. After all, a cheater would have to fool every single node in the network - not feasible.
In other words, Bitcoin's Blockchain is incommutable, which makes Bitcoin extremely secure.
The other way Bitcoin trumps regular currencies is in the way Bitcoin is decentralized. This means that users are no longer dependent on third parties like banks, governments, or financial institutions like Visa, PayPal and the like. The problem with centralized currencies is that the intermediaries that are required, whilst assumed to be fair and unbiased, aren't always. On the contrary.
All we need to do is look at the last banking crash to see that greed and corruption can creep into centralized payment systems. Iceland, Greece, Nicaragua, Ecuador, Zimbabwe. These are all examples of situations where mismanagement of currencies by bad actors led to a complete melt-down of the respective countries' economy. Typically, the public at large is the victim.
As Bitcoin is decentralized, i.e. trustless, fraud and greed do not factor into it. Bitcoin is impervious to human excesses.
Other advantages of Bitcoin are the way that you can transfer funds to anywhere in the world at a fraction of the price charged by banks and remittance organizations like Western Union now. Moreover, a Bitcoin transfer takes mere seconds to reach its recipient, a few minutes tops. Compare this with the 5 - 8 (working) days it takes traditional telegraphic transfers currently.
Also, since Bitcoin is a global currency, you'll never have to convert your fiat currency to another fiat currency when visiting a foreign country. Typically, you're charged commission for such conversions too. Goodbye conversion fees.
Perhaps best of all, since Bitcoin is immune to meddling by over-zealous central banks hell-bent on artificially lowering their debt by relentlessly printing their fiat money, Bitcoin has no issues with inflation and will ultimately be a suitable store of value too. A digital gold as it were. In fact, since there will only ever be a maximum of 21 million Bitcoin in circulation, Bitcoin is actually disinflationary, which is something even gold can't claim.
Still, all the above being said, Bitcoin, for now, remains a nascent currency. It's still quite volatile, for instance, in part due to speculators amplifying its rite of passage oscillations. And frankly, nobody really knows how Bitcoin's future will play out, or even if it will play out at all.
For one thing, government regulation can be a double-edged sword. As it happens, government regulation may result in wider acceptance, sure. But some governments may also decide to wield it to become Bitcoin's death knell.
Clearly, Bitcoin has immense potential. Its promise has been said to be on a par with that of the internet back in the 90s. In fact, Bitcoin's impact on our lives may well be bigger than that of the internet.
But, it's equally clear that it's not going to be just smooth sailing from here on out. Anybody keen to participate in this exciting journey would do well not to throw caution to the wind.
I am not an investment advisor and above article is for purely informational purposes and is not to be taken as investment advice. Investors are advised to personally undertake adequate due diligence, or to consult a financial advisor in order to determine what assets - if any - are appropriate to invest in.