In an age of credit cards, debit cards
and online bank accounts the prospect of digital currency is not as jarring as it might sound.
Transferring money digitally is very convenient, instantaneous and cheap. However, There is not much demand for a decentralized currency from the average consumer. For Bitcoin to work as an established currency, there would inevitably need to be an increase in regulation and consumer protection which in turn will increase Bitcoins transaction costs and reduce the anonymity, its two biggest appealing factors. There are also not many applications for the use of Bitcoins in the corporate world. Decentralization increases the risk of bankruptcy and so does the volatility in its price. Bitcoin can be used to bypass capital controls but only to a limited extent. Bitcoins in an investment portfolio increase returns and lower risk but are too risky to act as a core asset – they are useful for diversifying a portfolio. Bitcoin also lacks the liquidity that other fiat currencies have, it is vulnerable to code-based attacks and untraceable theft.
It is thus unlikely that much demand for Bitcoin will come from anyone apart from
investors looking to diversify their portfolio, customers with an interest in cryptocurrencies and customers looking to transact anonymously on the black market. It is unlikely that many stores will accept Bitcoin and that it will garner any widespread application. There is however plenty of room to expand within the field of cryptocurrency as its technology is very promising. Some want ownership of an asset such as a car, for instance, to be represented by a Bitcoin, utilizing its cryptographic technology. This technology would make it easier for people
to manage ownership of physical assets as it would all be digital. Bitcoin tokens of ownership
could be sold or rented out. This kind of „smart property” would turn the blockchain into a sort
of registry of ownership of any physical asset. The innovation of cryptocurrency and its
cryptography are an invention that could have many other applications. Another example would be that international banks could use this Bitcoin-like cryptography system to move money or create their own crypto-currencies.