The crypto revolution has increasingly attracted debates on the future of fat money, with many concerned that they would eventually destabilize local currencies. Critics claim that Bitcoin is the leading crypto that threatens the stability and utility of fiat currencies. Some economists and government regulators insist virtual currencies like Bitcoin are highly volatile assets that cannot effectively serve as a means of payment.
However, Bitcoin continues to attract mass adoption worldwide. Several mainstream institutions that had previously rejected crypto are embracing Bitcoin and campaigning for its adoption into multiple global economic sectors. Although Bitcoin creator Satoshi Nakamoto introduced it as an alternative transaction currency, it has also found utility as a high-value investment asset and an innovative technology.
So, can one use Bitcoin as an actual currency? Here’s how Bitcoin compares to fiat money in terms of its utility.
Payment Processing
Bitcoin is a decentralized virtual currency that anyone can use to send and receive payments online and in-store worldwide. Bitcoin payments occur on the blockchain virtually, without any intermediary, compared to fiat money transactions that must involve third parties such as banks and money processors. The Bitcoin network connects only the two parties. That’s the person sending the payments and the recipient.
While Bitcoin can facilitate payments like fiat currencies, its existence and utility are limited to the online space. Unlike local currencies that one can touch and feel, Bitcoin exists in digital form. Besides, Bitcoin payments can only occur over the internet. Bitcoin can facilitate payments like actual currencies, but all its transactions are digitized.
Things You Can Buy With Bitcoin
As revealed above, Bitcoin can serve as payment in various transactions. That is mainly due to its ease of access and divisibility. One Bitcoin is divisible into up eight smaller units, known as satoshis. That means you can use it to make payments for more significant, medium, and even micro transactions, like fiat money.
Several merchants have already integrated crypto into their payment systems, allowing their customers to pay for various goods and services. Bitcoin has a long list of things it can purchase, including cars, games, devices, household items, groceries, coffee, newspaper, surgery, airline tickets, accommodation and virtual assets.
The merchants that accept Bitcoin list their prices in BTC. Hence, customers know exactly the amount of Bitcoin they will pay during checkout, depending on the value of the ordered goods and services and Bitcoin’s market prices. However, the costs often change rapidly due to Bitcoin’s volatility.
Bitcoin Transactions’ Validation
Financial service providers such as banks usually require companies and individuals to adhere to Know Your Customer (KYC) rules. However, no condition exists for merchants to record the payments they receive in fiat money. Nevertheless, fiat money transactions are subject to government regulations that strictly control their usage in an economy.
Decentralization implies that Bitcoin runs without any central authority. That means you can use it to send and receive payments worldwide without any external intervention. However, Bitcoin’s underlying blockchain technology verifies and validates all transactions on an irreversible, encrypted digital public ledger.
Unlike fiat money transactions that usually require you to reveal your identity, the Bitcoin network does not show users’ real-world identities. The blockchain ledger only reveals users’ public addresses, the transacted amounts and times. Bitcoin can serve the same purposes as actual money, but its transactions are irreversible and pseudonymous.
Overall, you can use Bitcoin to transfer payments like an actual currency. However, all Bitcoin payments are irreversible and strictly occur online.
