Comparison between Bitcoin and Money in Modern World - Essay Example

Since its introduction, the use of Bitcoin has had a volatile journey attracting both conventional investors and use in illegal trade. Contrary to Bitcoin, money is an approved medium of exchange in the form of coins and banknotes, produced and controlled by central banks of different countries. The Bitcoin system is entirely dependent on internet platforms, which are readily available across the globe because of technological advancement (Rotman 1). Using Bitcoin, the average income earners can easily transact beyond border transactions without incurring extra costs in physically moving to those places. This essay examines the use of Bitcoin and money as applied in the current system.

Comparison between Bitcoin and Money in the modern world

Kudlow Larry downplays the rise in the use of digital currency. He cites the rapid fluctuations in prices by hundreds of dollars in the space as a key challenge that emanates from digital currency use. He outlines an example of an individual who buys an item for $500 but after the retailer processes payment, the digital currency falls to $100 in value. He resolves that both sellers and buyers make associated losses because Bitcoin is not a reliable medium of exchange with a dependable store of value (Kudlow 1). On the contrary, money has a store of value. Its value does not fluctuate as rapidly and frequently as in the case of digital currency. Because Bitcoin has no store of value, economists prefer the money system to digital currency.

Digital money use has no border restrictions. Making cross-border transactions is easier and simpler than in the case of money. The money system is more reliable and regular fluctuations in prices do not affect it. Digital currency use will therefore not pose a significant effect on money use. The reason for this is that the money system possesses superior features like security and reliability that the digital currency system lacks.

Effects of the rising use of digital currency on the Economy
There are viewpoints that the rising use of digital currency like Bitcoin transactions will not pose a significant impact on countries’ economic progress. According to Giulio, bitcoin transactions are easily traceable to their initiators hence American government, for instance, will fully advocate its use. In a state-controlled digital economy, the taxation units will be able to track all the digital currency transactions and tax them accordingly. Gaulio further argues that digital currency transactions are faster and cheaper than the money system (1). The cheaper cost is an incentive to federal government agencies and end users. American states will try certain aspects of digital currencies to eliminate undesired shortcomings including anonymity and volatility. According to proponents of Bitcoin use, the move will help in the creation of highly efficient and fully regulated cost-effective digital economies.

Future of Bitcoins and Money
Carter Adam reports how Lorne Lantz purchases his lunch using Bitcoin. He understands and knows what the critics say about digital current even though it remains his choice. The continued use of bitcoins indicates the rise in the use of digital currency with a corresponding fall in money preference and use. Lantz remarks on the tremendous growth in the use of digital money within four years from not being able to purchase anything to purchasing everything. Lantz says that money transfer overseas using digital currency is cheaper than using traditional money systems (Carter 1). The money system takes longer duration than the digital currency system hence digital currency usage poses a likelihood of overtaking money use.

Casey and Paul investors such as Netscape founder Andreessin and LinkedIn founder Reid investment of large sums of $ 315 million in Bitcoin-related projects in 2012. The investment tripled in the following year according to the digital currency news site. In 2015, the investment amount rose to $ 75 million including New York Stock Exchange (Casey and Paul 1). The massive investments in Bitcoin-related projects predict growth in its use in the future. 

However, there has not been much public buy-in and venture into digital currency transactions according to Casey and Paul’s report. The low confidence in the system arises because of volatility, insecurity, and criminality dominating Bitcoin. The trend can predict a similar trend for the future. Money transactions however slow will still dominate the market in terms of users despite the high spread of Bitcoin on online forums.

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