I just saw an article here that got me thinking:
Will people ever actually use crypto as currency? I mean, will we ever reach a point where people actually use crypto to buy things instead of just as a speculative asset or an investment? I think the answer is:
Yes, but....
The old saying goes that necessity is the mother of invention. It is also the mother of adoption or substitution.
We see people actively using crypto in countries that have been blocked off from the international financial system or in countries facing severe economic crisis. This is promising, and I am sure all of us are happy that crypto is having a positive effect on people`s lives.
It also does not take a genius to see that the international conflicts on the horizon might lead certain countries to take BTC more seriously as a reserve currency.
So what kind of crisis would warrant broader adoption of crypto as a medium of exchange?
The obvious answer is hyperinflation. Now, for the last few years, many people predicted that all of the quantiative easing that has been going on would lead to hyperinflation, and that hasn't materialized due to all kinds of deflationary factors.
Sure, lots of people talk about the government just printing money, but this is simplistic. Of
course, at a certain point if the government keeps printing more and more money, no amount of deflationary factors will offset the inflationary effects of an increased money supply.
Even though the government is not like a household and can simply keep making more money, there is only so much QE you can do.
Let's face it: the dollar`s status as a reserve currency is questionable (and crypto will play a huge role in that downward trend).
All of the spending as a result of the pandemic is likely to accelarate it. In the last nine years,the Fed's balance sheet has gone from millions to trillions as it feeds the liquidity monster.
In short, it matters less and less what currency people use on a daily basis as long as convertibility is easy.
If BTC becomes a reserve currency, it will become more and more useful as a medium of exchange as particular fiats decline.
Exporting countries that want to keep their currencies from appreciating too much will adopt it as a reserve currency and it will work its way down the foodchain.
Of course, we are talking about the long-term here. My point is that while people who point out barely anyone uses crypto for real transactions have a point, they are not seeing the big picture.
Heck, one day you might even be able to buy pizza with it!
