This is an op-ed by Deidar Beckbauff, founder and CEO of the Bitcoin mining company Xive Group.
The financial industry as a whole is continuously moving into the digital space, with the global digital payments market growing approx $100 billion in revenue last year, with expectations to reach $303 billion by 2030. The penetration rate of digital payments among general consumers is also increasing, as McKinsey reconnaissance From 2022 it was found that nearly 90% of US residents use some form of digital payments.
The bitcoin market in particular is getting more attention, as the recent banking crisis in the US and the negative outlook for the global economy are driving more individuals and companies into the sector. Bitcoin is seen by many as a good store of value, independent of governments and banks, and providing an attractive alternative to traditional financial investments.
But can it realistically replace fiat currencies as the money of the future?
Bitcoin positions: progress so far
Ten years ago, only a small niche community was interested in BTC. Now, it is estimated 425 million people worldwide own cryptocurrencies, following a 39% growth in digital asset owners in 2022.
Until the last few years, it was the norm for many to make fun of Bitcoin and call it a scam. But after 2020, there has been a dramatic change in attitudes, with the perception of BTC evolving from a speculative investment to a legitimate store of value and medium of exchange.
The main reason behind this shift is the growing institutional adoption of Bitcoin. Since 2020, institutional investors have entered the market en masse, which has led to a huge surge in the rise and pile up Over 7.8% of the total supply of bitcoin as of May 2023. Thus, bitcoin has become a legitimate asset class that is being taken more seriously by more people.
Moreover, Deloitte survey 2022 open 75% of retailers surveyed plan to accept cryptocurrency payments within the next two years.
Besides, bitcoin has become legal tender in several jurisdictions including, in particular, El Salvador.
Sustainable bitcoin mining is changing the narrative
Due to the fact that it requires significant computational power, bitcoin mining operations are often associated with high energy consumption. and estimates that suggest these processes Consume enough energy To rival the annual electricity needs of some entire countries, Bitcoin has come under heavy criticism in recent years, representing a major barrier to mainstream adoption.
However, Bitcoin’s inherent energy consumption can provide significant benefits by stabilizing electricity grids and reducing the cost of energy for consumers by balancing supply and demand.
Monthly and yearly electricity consumption is distributed unevenly throughout the day. Peak demand often occurs in the morning and evening hours, while at night and on weekends it drops off significantly. In many places, bitcoin mining may only consume spare electricity that is not used by the local population, allowing power plants to operate at full capacity. Meanwhile, ordinary consumers are relieved of larger expenses intended to cover the production of that “excess” electricity.
Moreover, the fierce competition between validators and the deflationary nature of Bitcoin motivate miners to find more efficient and sustainable ways to mine. As the mining process becomes more competitive, miners will likely continue to invest in more advanced hardware and software to increase their chances of successfully mining new Bitcoin blocks. In addition, they will take more steps to use renewable energy sources, such as wind and solar energy, thus further reducing the environmental impact of mining.
As a result, I expect public perception of mining to become more positive in the next five years, and mining itself to become more sustainable as a business.
Following the Salvadoran example
In recent years, there has been a growing trend towards accepting Bitcoin as a legal payment method. Many countries have endorsed the use of BTC for various purposes, such as purchasing goods and services or paying taxes.
In September 2021, El Salvador has taken this trend even further become The first country to make bitcoin a legal tender currency. Despite a somewhat turbulent start, the nation’s experience has brought many positive results, especially if we are It is considered Salvadoran GDP growth of more than 10% in 2021 and tourism increased by 30% since the adoption of BTC.
I believe that more countries will follow in El Salvador’s footsteps to find an alternative solution to protect their economies from the current economic uncertainty. For example, similar plans to make BTC legal tender have surfaced in Mexico, Arizona, and Switzerland. In the meantime, the upcoming Liechtenstein legislation plans To enable Bitcoin payments for government services.
However, while the legalization of Bitcoin as a payment method has many advantages, independent cryptocurrencies have always been seen as a threat to securities. The growing adoption of cryptocurrencies around the world is certainly the reason why many governments are committed to developing their own central bank digital currencies (CBDC). They are essentially national currencies subject to state control over their issuance and payment networks.
It can be said that CBDCs have a higher chance of gaining mainstream adoption than Bitcoin in the coming years. This is due to its potential for integration with existing financial systems and regulatory frameworks, as well as the support and support of central banks around the world. However, both Bitcoin and CBDCs are still in the early stages of development, and their adoption will depend on a variety of factors.
Is Bitcoin the currency of the future?
With shifting consumer and business attitudes, increasing use as a store of value and medium of exchange, as well as positive developments in the mining industry and between national governments, Bitcoin is gradually progressing towards mainstream adoption.
As Bitcoin’s use cases continue to expand, I believe that more individuals and institutions will recognize its potential as a long-term investment tool.
This is a guest post by Deidar Bekbaov. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
