To some Bitcoin is digital gold, to others a store of value. Some see Bitcoin as a new financial paradigm and that the cryptocurrency will replace cash. Some feel its use is in protecting from inflation, others as a low-cost method of international transfers. Some believe that Bitcoins value will fall to zero and that it is at its heart a Ponzi scheme.
Bitcoin does have some way to go until it can be confidently considered any of these. However, with the recent price increase, something interesting has happened. It has started (in its smallest denomination) to become as valuable as some real-world fiat currencies.
Satoshi Nakamoto, Bitcoin’s creator, coded the cryptocurrency to be divisible by up to eight decimal spaces, or 0.00000001 BTC.
Whilst the smallest possible denomination of Bitcoin is worth only a mere $0.000080 – a long way off from even being valued at a penny, the smallest physical coin offered in the United States as fiat currency. The lowest denomination of Bitcoin, the Satoshi, named after the cryptocurrency’s creator – is now worth more than the Iranian Rial, Vietnamese Dong, and the Indonesian Rupiah – all of which are national fiat currencies of third-world countries.
One satoshi or 0.00000001 BTC is now worth over 3.3 Iranian Rial, 1.8 Vietnamese Dong, or 1.1 Indonesian Rupiah. If one Satoshi was to ever reach the equivalent value of one United States Dollar, each BTC would be valued at $100 million US dollars.
Third-world countries with struggling economies that have national fiat currencies valued on parity with one Satoshi are also countries that could benefit the most and find the most value in using Bitcoin over their native currencies.
It’s in these countries where trust in fiat currency is very low, inflation is often high, and the country’s respective governments regularly overstep their boundaries when it comes to their citizen’s hard earned money.
Bitcoin and other similar cryptocurrencies were designed to be decentralized and devoid of any central controlling party. This puts the ultimate control over an individual’s money back into the hands of the individual, not the state.
Fiat currency has for a long time dominated global monetary systems. It has replaced gold as the main transfer of wealth and value. Such an evolution didn’t happen overnight, and until now, nothing else has had the potential to replace fiat currency.
If Bitcoin does indeed become the global currency and is used widely as the main form of “money,” fiat currencies that are currently the “face” of money will fall out of favor, and eventually become a mere memory as the entire world goes digital. However, Bitcoin will need to work on lowering it’s fees if it is to compete with other cryptocurrencies that offer much quicker processing times and much lower fees. Maybe it is best if Bitcoin for now is still considered a store of value.