In just twelve years, Bitcoin has gone from an online plaything for nerds to a serious competitor to national currencies. Not only that but it also promises to knock gold off its 4000-year pedestal as the go-to store of value in troubled times. So, it is no wonder that many people’s first thought about digital currency is Bitcoin. Here are some thoughts on what I think the future holds for Bitcoin and for national currencies that have also gone digital.
Trust-based internet money becoming trusted
We are witnessing the total breakdown of trust in governments and also in the integrity of their money. People are once more looking for a form of money that they can trust to keep its value, they can hold it while knowing that they are owning it and it is easy to store.
No other store of value until now has ever fulfilled those three human needs all at once. Bitcoin is the first to do so. We are going to see greater demand for Bitcoin in the future, as people come to trust it for its value, its convenience and as private property.
We have seen companies such as MicroStrategy and, now Twitter, adopt Bitcoin, and institutional financial houses, like BNY Mellon and Fidelity are promising to offer Bitcoin services. We watched as El Salvador became the first country in the world to make Bitcoin legal tender alongside the US dollar.
Here at LQwD we say, yes, Bitcoin adoption will continue to strengthen. But we also believe that the presence of the Lightning Network, with its superfast and low-cost transactions, will turn that dribble of adoption into a surge in the months and years to come. Lightning will be the key that transforms Bitcoin from a store-of-value to a fully-fledged payment network. It will embolden more companies to come forward and adopt Bitcoin with the Lightning second layer as their crypto payment solution. It was the Lightning component that helped El Salvador propose Bitcoin to its people as a viable payment platform and it is very likely that other countries will follow suit.
Dual universe with CBDCs?
Central bank digital currencies (CBDC) will play a huge part in the future of digital currencies. You may have seen them identified in the press as CBDCs. We don’t know much about how these CBDCs will work, but we can at least identify how they differ from Bitcoin and the other cryptocurrencies. The CBDCs are centralized, whereas Bitcoin is decentralized. While Bitcoin’s blockchain has a ledger available for all the public to see, we wonder whether central banks are likely to be as transparent about the ledger of their CBDCs.
As for the future, there is a culture among central bankers that Bitcoin should just disappear. I believe that is wishful thinking – Bitcoin is active all over the world and there is no central control centre that can be shut down. So, we anticipate that a dual universe will emerge where we have centralized, nation-based, CBDCs, but a lot of their thunder may get stolen by the much greater enthusiasm that Bitcoin receives.
The future of digital currencies is going to revolve around trust. Do you trust the internet to provide access to, and value for, the goods and services that you have grown accustomed to purchasing over the years? And, if so, which platform would you trust: a decentralized network that still remains mysterious to most people but has proven itself to be secure OR the centralized structure of the legacy banking system with which you are familiar, however, has created concentrated points of failure and is at the whim of governments?
By Shone Anstey
Shone is the CEO and Co-founder of LQwD, the first publicly traded, pure play, purpose-built bitcoin company that’s focused on solutions that power the growth of the Bitcoin Lightning Network. Shone Anstey brings 20 years of experience in building complex technologies and software within search, analytics, and data centre operations.