Bitcoin is predicted to transform the global economy. Financial experts speculate that bitcoin in its current positive trend will one day replace fiat money to become the currency of choice among all people.
Because of the limited supply of Bitcoin however, an increasing number of Bitcoin enthusiasts argue that such disadvantage could prevent bitcoin from surpassing the market dominance of reserve currencies. However bitcoin is highly divisible, which means that in a likely scenario where the demand of bitcoin increases due to its increased usage, automatically its value increases. Increase in the value makes fractional units of bitcoin as valuable as bitcoin in present day. Currently the smallest unit of bitcoin is satoshi. One satoshi is equivalent to hundredth of a millionth bitcoin. If bitcoin were to become a global reserve currency, further smaller units of bitcoin than a satoshi can be created to meet the demands.
In terms of growing demand, bitcoin can hold its ground, no matter how much the demand is. Similarly, bitcoin has so far changed the way peer-to-peer transactions across geographical boundaries. The selling point for bitcoin has been minimal transaction fees and faster transfers. Bitcoin based trade and fund transfer can bring in a lot of changes to the decision making processes, by reducing the time taken to make and execute decision thereby improving the performance.
Even if bitcoin doesn’t achieve the global currency status it can still function effectively as a regional currency (a.k.a local currency). Since its inception, bitcoin has built its own ecosystem with dedicated user base, merchants, exchanges and more. All these are by default the features of most regional currencies. Use of regional currency is known to improve local economy by reducing the outflow of funds from the region, which itself is a definition of sustainability of local economy.
Bitcoin as a currency seems sustainable, in spite of the recent revelation by Mike Hearn. While Mike has a valid point of view, wishful thinking dictates that once Bitcoin reaches the critically inoperable state, all stakeholders will come to a consensus and opt for an alternative block size. Bitcoin Classic is one such example where the community is actively backing an alternative to other BIPs targeted towards increasing the block size. Many bitcoin mining heavyweights have already declared their support to the new proposal.
READ MORE: The End is Near! – Mike Hearn on Bitcoin
Ref. Local Currencies: Catalysts for Sustainable Regional Economies by Robert Swann and Susan Witt SCHUMACHER CENTER ESSAY, 1995
