There has been a lot of speculation… mountains of speculation around the various causes for the rapid increase in Bitcoin. With so many events happening around Bitcoin currently it is creating a ton of excitement throughout the Bitcoin market. But is everything shear speculation, pinning our hopes and dreams on possibilities and probabilities? Let’s take a look at Bitcoin and define why their is a need, as when there is a need in the market SOMETHING will fill this need at some point (where a want or desire may be just a flash in the pan!).
China. China is the biggest player in Bitcoin at the moment having the largest market volume (largest amount of trading value). China also has recently had a higher Bitcoin value on the major exchanges, often $10-$30 USD higher than Coinbase (the largest USA Bitcoin exchange). With the way the government and market are going in China Bitcoin is quite arguably a necessity.
The rationale for this?
- Money is getting harder and harder to transfer out of the country due to government controls. Bitcoin provides liquidity which is a necessity it today’s market. What good is your money if you can’t use it when and where you want to!
- With some devaluation of the Yuan as of recent and with the possibility of further devaluation, Bitcoin can be used as a backup plan. Bitcoin has outperformed every single fiat currency this year, and when the Yuan or USD becomes devalued historically Bitcoin holds it value in comparison to the international market. Bitcoin in all of its volatility actually provides stability in this manner! Example: Your countries currency is worth 10 times less tomorrow, meaning that compared to your countries currency Bitcoin would be worth 10 times more.
- Bitcoin is a low fee system. While this is not just true in China, the Chinese take advantage of this fact more than any other country at this time. Time and money are both saved by using Bitcoin as a financial instrument.
- Bitcoin fills a role that has yet to be adequately replicated by current payment systems, that role is cash. This is not just strictly true in China, either. Sure, there are many things in life that you’d love to use your credit card for. But let’s face it, there are many people that buy many things with cash. Everyone has various uses for cash, but if cash was not needed all money would be in accounts and credit cards. Having your own wallet filled with Bitcoin (cash) that you own and you can spend. Think about in your daily life, why do you use cash instead of a credit card? It’s instant (mostly), there is no charge backs, you can store it away, and it has worth based on societies joint agreement of its worth.
In a world that is becoming less tangible with the internet, a Bitcoin may be more tangible than many of the alternatives. It is not so much a want, but a need in society. Conditions in the Chinese markets and legal system have made Bitcoin a necessity (and a life saver) to many. The internet needs cash!