When Bitcoin was launched, it was seen as a decentralized currency that would replace traditional money. Bitcoin has been around for over a decade, and several altcoins have been created to fix flaws in the Bitcoin blockchain. However, despite the level of adoption so far, Bitcoin isn’t any closer to replacing fiat money. A United States regulator has weighed in on Bitcoin’s ability to overtake fiat.
Can Bitcoin Replace Fiat Currency?
Yesterday, Michael Barry, an executive at the Federal Reserve, said that the volatility of Bitcoin is simply too high for the cryptocurrency to ever be viewed as a replacement for traditional money. He said cryptocurrencies will never advance to become globally accepted alternatives to cash.
While the idea of cryptocurrencies eventually replacing traditional money is exciting on paper, the reality is different. The price of Bitcoin and other cryptocurrencies can move from all-time highs to new all-time lows within a few hours or days. There is nothing an investor or federal government can do to stop it.
If business people were to initiate transactions and the price of Bitcoin fell while funds were being transferred, the seller would sustain losses. Stablecoins were designed to address this volatility problem but haven’t lived up to expectations either.
Regulatory Uncertainty and Bitcoin’s Global Adoption
Another factor that is affecting the global adoption of Bitcoin is regulatory uncertainty. Regulators in many countries are not yet willing to put their weight behind cryptocurrencies or recognize them as legal tender. It is due to the high volatility, difficulty tracking, and a range of other factors. Also, the decentralized nature of Bitcoin and other cryptocurrencies makes it difficult for regulators to take a global stance on the industry.
In other news, the Bitcoin price is trading red against the USD. At the time of writing, the world’s foremost cryptocurrency was trading at $19,156.25. The cryptocurrency is down by 0.11% against the USD. The cryptocurrency is trading in the $18,971.46 to $19,280.68 range over 24 hours.