When bitcoin came in 2009, little did potential users know that a time was coming when they would be caught between making two difficult decisions – adopting bitcoin as an investment and using it as a payment system. Ordinarily, making such decisions should not be a problem. However, considering the importance of the two choices, making the right decision becomes confusing.
Before concluding on what most people prefer, let us quickly take a look at both sides of the coin. We can then understand the right sides of bitcoin as an investment or a payment system.
Bitcoin as an investment
When this cryptocurrency was introduced, several people never gave it a chance. Some persons, including experts, even branded it a ‘fraud.’ One of those who saw it as a bubble and a fraud was JP Morgan’s Jamie Dimon. Nonetheless, the digital currency has grown to become one of the most sought-after investments. But why do people want to invest in bitcoin? Here are a few reasons:
High return on investment
Buying bitcoin for less than a cent in 2009 to selling it for over $19,000 in December 2019 has arguably raked in one of the highest percentages in terms of return on investment. One investor who has this positive story to tell is Smith, who bought $3,000 worth of bitcoin at $0.15 per coin (20,000 coins). He later made a $25 million profit on his $3,000 investment and decided to resign his job to travel around the world. Investing in bitcoin is one of the easiest ways to earn huge profit, though the price of the coin is highly volatile.
Increasing global acceptance
The rate at which the world is accepting bitcoin, it would not be long before everyone accepts the coin as a means of transaction. Speaking on Fox Business, billionaire businessman, Tim Draper, who has made several accurate predictions in the past, advised everyone to invest in bitcoin because the digital coin will soon become the “biggest change in the history of the world”. Investing your money in it now would mean having a piece of the cake in the next few years when demands would drive the price.
Controls the crypto market
Another reason why a lot of people love bitcoin as an investment is that it controls the crypto market. Majority of the altcoins on the CoinMarketCap gain or lose prices based on the direction of the prices of bitcoin at a given time. Bitcoin is already established in the crypto ecosystem and dictates the movement of the prices of other coins.
Bitcoin as a payment system
Apart from seeing bitcoin as a good investment, several users love it because it serves as a means of payment. Here are some reasons why some users prefer the digital currency as a payment system:
Accepted online and offline
Bitcoin is no longer restricted to online transactions. The cryptocurrency is gradually expanding at a tremendous speed and giving opportunities to traders to avail their funds offline for smoother business running.
For instance, ATMs are already being installed in several locations across the world to enable people to withdraw their bitcoin earnings with ease. Hyosung, in partnership with Just Cash, is already making this available to buyers and sellers in some countries such as Korea.
General Bytes, a Czech-based ATM manufacturer, has also supplied over 2800 ATMs to over 63 countries. Bitcoin’s popularity as a means of payment is soaring.
Gradually taking over from fiat
Gone are the days when merchants and buyers had fiat as the only means of paying for goods and services. With its faster speed, bitcoin has come to stay and is gradually edging fiat as a means of payment. Business owners prefer bitcoin because it makes payment for their goods and services faster. Should bitcoin sustain its current advantage and improve upon it, it would not be long before the world jettisons fiat for bitcoin.
Secure and decentralized
Another reason why bitcoin has gained traction is that it is secure as a means of payment. It is difficult to hijack transactions or reverse them to defraud sellers. Besides, bitcoin transactions are decentralized, taking them well beyond the control of third parties such as middlemen, central banks, and other financial institutions. Since it is not under the control of a single government, it is difficult to manipulate, unlike fiat.
It is cost-effective
Fiat is not only slow as a means of payment; it is expensive due to the high rate of transaction fees charged. However, with bitcoin, transaction fees are lesser than those of credit/debit cards, thereby making the cryptocurrency the preferred option. A lot of persons are attracted to bitcoin just because it makes it cheaper for them to run their businesses.
So, what is the preference?
We have seen that two crucial things are attracting people to bitcoin; the quest for profit and the desire to run businesses smoothly and faster. It is, therefore, difficult to say with certainty that one group dominates the other.
Just as several investors would love bitcoin to continue to be around for a longer period because it gives them the opportunity to earn more profits, a lot of other merchants and online shoppers would be happy to have the coin because it increases trust, makes transactions faster, has zero inflation risk, more secure, and decentralized.
It will suffice to say that one’s preference depends on what benefit one hopes to get or the solution that bitcoin can provide to one’s business. The number of people investing in bitcoin is fair enough just as those using the coin as a payment system. The bottom line is that bitcoin has come to stay and that there are two classes of people jostling for its use: the investor and the merchants/buyers, who have found the coin useful in one way or the other. In my opinion, it’s a wise decision to invest at least a little beside using bitcoin as a payment option.
We would love to hear your opinion. What do you prefer as a bitcoin user, investment, or payment system? Please, share your thoughts using the comment section below.