Bitcoin isn't likely to be used like cash for at least the next 5 years, and that's great news!
Bitcoin isn't likely to catch on as a widely used currency for at least the next 5 years according to Michael Novogratz
Our favorite ex Goldman alum was in the news earlier today saying something I wholeheartedly agree with...
He said that bitcoin wasn't likely to be widely used as a currency within the course of the next 5 years.
His exact quote:
"I don't think Bitcoin is going to be used as a transactional currency anytime in the next five years, bitcoin is being used as a store of value."
I don't always agree with Mike, but I certainly do in this instance.
I agree with him for several reasons...
Bitcoin is simply too slow, too expensive, and too difficult to use for 'average people' for it to be widely used as a currency at this point in time.
However, that's actually a good thing in the near term...
Bitcoin not likely to be widely used as a currency is actually a good thing in the near term...
Interestingly enough, bitcoin not being used as a currency is a good thing for a couple reasons in my opinion.
The first being that if people don't expect it to work as a widely used currency, they won't be upset when they find out very quickly that it has limitations, such as what I mentioned above.
However, the bigger deal has to do with governments around the world.
Governments have a funny way of trying really really hard to stamp out things that threaten their sovereignty.
They also have a way of trying really really hard to stamp out things that are widely used for money laundering and tax evasion.
If bitcoin isn't widely used for any of those purposes and doesn't threaten the sovereignty of a country (at least not yet), then there isn't really any reason to make bitcoin public enemy number 1, and that is a very good thing for its price.
Yes bitcoin would be very difficult to outright kill, we all have heard that argument before.
However, it wouldn't be that difficult to seriously cripple...
If several of the largest countries all got together and banned bitcoin in unison, it would several hamper the price and it's potential.
Think laws like anyone caught holding, mining, transacting, or dealing in bitcoin would be punishable by 10 years in prison (or worse), something like that would do serious damage to the price of bitcoin and possibly it's ultimate potential.
Bitcoin of course wouldn't die due to these laws, it would move to the underground like it was way back when, but it's market cap would likely be significantly lower than it is right now.
The little engine that could...
Governments figured out several years ago that bitcoin wasn't really a threat to their fiat currencies in the near term so they have allowed it to coexist with current legacy financial systems, not feeling much pressure to ban.
The interesting thing will be what happens sometime after these next 5 years when the technology is there for bitcoin to work both as a store of value as well as compete/replace fiat currencies...
When that happens there will be an all out war on currency.
The hope is that by that time bitcoin will be so embedded within the global population that any laws to try to limit its use would be futile.
It's pretty rare to have something that works well both as a store of value as well as a good currency, but at some point bitcoin may be able to do both. It just won't be for at least the next 5 years according to Mike and I. :)
It's going to be a fun next couple of years!
Stay informed my friends.