Bitcoin is going a little nuts this week. But the price at which a bitcoin exchanges at isn’t the only factor by which you should value the currency. Far, far from it.
Everyone focuses on the price of Bitcoin these days and it is no wonder why. But for Bitcoin to be anything more than a store of value, we need to see a transactional ecosystem develop. When the citizens of the world will be able to buy and sell from each other and from retailers of all shapes and sizes via Bitcoin, then we will have truly realized the potential of a global digital currency.
The more transactions occur with Bitcoin, especially within very well established marketplaces, the more value a bitcoin can hold. Why? Because if the price of a single bitcoin is too volatile then the currency will never truly end up being a global alternative. No one can bank on it. (Pun intended.)
Bitcoins need to be saved and exchanged by entities that currently have real value and that have a real way of exchanging those bitcoins around the world. This currency can’t be reserved for the technophiles out there that are trying to simply by low and sell high. Imagine if, say, some of the largest corporations in the world began to accept this currency and had a few bitcoin in savings. This would help to both establish bitcoin in the marketplaces and stabilize it.
The real value will start to come in when a fair number of businesses accept bitcoin around the world for goods and services and people stop simply thinking about the current exchange rate.
We’re years away from seeing the true potential for and what will happen with P2P currencies. It will be exciting to watch.
