The perception of Bitcoin (BTC), the first acclaimed digital currency as a means of facilitating cash transactions or mobile payments is almost getting eroded, all thanks to the rise in the value of the asset, a move that started in the past year, 2020. Remarkably, Bitcoin now has a multifaceted tag as virtual cash, a viable hedge against inflation as well as a better store of value than fiat currencies that are prone to consistent devaluations owing to government policies.
Bitcoin is originally designed as a virtual currency as the coin’s White Paper rightly revealed;
“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network,” with BTC standing as the proposition being referred to.
The premier coin fulfilled more of this role in its early stages, a situation that helped it gain massive acceptance around the world as many people saw its potential for completing cash transactions taking note of its speed, and low fees in relation to what is existent in today’s traditional finance.
Over time, the coin’s price surged with 2020 ranking as one of the most pivotal years in the coin’s history with massive institutional adoption of the coin. The pumping of money into Bitcoin to amass a large amount of the coin by top institutions including Grayscale Capital, MicroStrategy Incorporated amongst others created a supply gap that drove the price of Bitcoin past a new all-time high at $35,000. It is worthy of note that these firms purchased Bitcoin, not because of its primary use case, but because of its potential to rise in value over time.
To Use Bitcoin for Transactions, Or Not?
While it has been established that the crop of these institutional HODLers of Bitcoin did not buy up the coin to use in payment transactions, the dilemma now behooves on the retail investor, whether to use their Bitcoin holdings for transactions or not.
Bitcoin’s price has placed it at a point where the few privileged holders will want to safeguard their holdings in order to benefit from any future pump in price. The potential for this continuous surge in price as high as top analysts including multinational investment bank JPMorgan Chase has predicted more than a 5 fold rise in the price of Bitcoin in the near future.
While many traders and vendors around the world still utilize Bitcoin and the other surging altcoins for transactions, some may argue that each BTC that departs from the wallet of a holder will be repurchased with a higher amount at a later date. This probability makes the use of Bitcoin for transactions not a very wise or advisable move at this time.
Bitcoin according to Coingecko is currently up by over 31% in 2021 to over $38,000 at the time of writing and the technical indicators point to further growth in both the near and long-terms respectively.