Cash Neither Helps Nor Hinders Bitcoin Adoption That Much
When trying to understand the concept of Bitcoin, some people will tend to notice how cash exists and works fine the way it is. While it is certain cash is a proper form of monetary exchange, there are some inherent problems with this method of payment. But out of all of the options linked to the traditional financial system, it might be the best solution available out there for now. But is cash the reason Bitcoin does not make sense? Probably not.
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Looking at cash from a negative point of view, it is perhaps the clumsiest way to exchange monetary value with other people. There are so many different bills and coins, not to mention the wide variety of fiat currencies around the world. Plus, consumers need to deal with change after paying, resulting in different bills and coins.
Secondly, cash is as close to anonymous as any financial tool will ever get. As soon as cash leaves the banking ecosystem and finds its way to our wallet, there is no telling who owns what amount or which bills and coins exactly. Moreover, there is no personal information attached to cash, allowing individuals to protect their privacy at all times.
But there are some positive sides to cash as well. While it is clumsy at times, it’s the only remaining true peer-to-peer payment method in the financial world. Physical interaction is required on both sides of the transaction to exchange value. Some people might argue this is the same with card payments, but that is not the case. No change is involved in card payments, and no physical exchange takes place either.
What is even more important, cash gives consumers some degree of financial freedom. Anyone in the world can spend cash at any location as it is the most commonly accepted form of payment in the world today. Card payments, and even mobile payments are becoming more popular, but they are a far cry from mainstream adoption.
Which brings us to another problem with cash: there is no fixed supply. Central banks can keep printing additional bills and create additional coins as they see fit. Any form of monetary value exchange without a limited supply will lose value over time, and cash is a perfect example of how inflation leads to devaluation.
On paper – no pun intended – the usage of cash is neither bad or good for Bitcoin adoption on a global scale. There are plenty of opportunities to convert cash to Bitcoin and vice versa, and both forms of monetary value exchange co-exist peacefully. But there is some truth to the idea of how widespread cash usage makes it more difficult for Bitcoin to gain mainstream traction.
There are certain similarities between cash and Bitcoin too, though. Both forms of payment put the end user in control of their finances, although Bitcoin is not issued or controlled by any bank. Cash has far less technical baggage to get one’s head around, even though it is far from a simple concept. Most consumers simply don’t question the ideology of cash, and they are not looking for alternatives either.
In the end, there does not seem to be a reason Bitcoin should replace cash in the long run. Both payment methods have their advantages and drawbacks, and they can easily co-exist for the time being, Whether or not that situation will change in the future, remains to be seen, though.
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