Cash is King in the Age of Cryptocurrency - Essay Example

Cash is King in the Age of Cryptocurrency Bitcoins are forms of digital payment systems that adapt encryption meant to regulate currency unit generations and verification of funds transfer. The paper looks to prove and insist that cash is better compared to its Bitcoin counterpart. Nakamoto Satoshi is the founding father in 2009 operating independent of control from the central bank. The venture has grown in leaps and bounds both in illegal trade and conventional investors. Despite the encryption running in the technology, the approach is quite prone and potential to hack intrusions from the ever changing technology from malicious internet users.

On the other side, cash is a verified exchange medium, notes, and coins, minted and circulated by the central bank in individual nations. Money is readily available unlike bitcoins, which are solely reliant on the presence of an internet connection (Casey and Paul). Take a scenario like the recent internet outage in North Korea. If the nation was using bitcoins for its national transactions, such an outage could cripple an economy contrary to the physical cash as transactions ago uninterrupted.

This portrays the superiority physical cash over bitcoins as pertains to security and convenience. The only outstanding benefit over physical cash is the speed of transaction across borders without incurring extra charges as compared to physical cash. As the prices in the dollar value keep on oscillating conversion after purchases may have the value declining greatly making it an unreliable and undependable value controller compared to physical cash that has reduced fluctuation. This makes physical cash as a worthy store for value.

Additionally, bitcoins are an untrustworthy form of currency at the moment indicated by the dragging public buyout. Volatility, insecurity, and criminal domination bitcoins are the key factors to blame (Kudlo). Therefore, this is a mere indication of how important physical cash is compared to bitcoins. To consider a commodity as a form of good money, it must be dividable, fungible, effort to acquire and limited among other features. Of these main factors, bitcoins lack fundamental usefulness.

The highest challenge from the average people have with bitcoins is lack of trust. Consider a situation where a buyer purchases a product and is at the mercy of a merchant introducing room for worries of losing the bitcoin wallet. This is a challenge that is very rare for the physical face to face transaction using tangible cash. The world is not ready to welcome bitcoin over cash. Not every person in various nations especially in third world nation have access to consistent internet connection leave alone a mobile device or personal computer.

This would form a bottleneck while rolling out bitcoin universally. On the contrary, cash can easily change hands from wealthy to poor individual and vice versa paying for products and services. Illiteracy must not go unmentioned (Elwell, Murphy and Seitzinger 12). Similar to reduced access to internet or to a mobile device, illiteracy is also to be questioned for the eligibility of bitcoin. Training each individual on the utilization of bitcoins would call for starting initially on sensitization of the users from the basic concept of computer use.

This is more than enough a fact to prove that bitcoins are not welcome at the moment but probably in the future, in the meantime money is the king Going back in age to the day of S&H Green Stamps, these were issued through S&H and were open to exchange for products in their catalog. One can compare this to having a nation adopt specified currency used by a central bank. On the contrary, bitcoins are decentralized which does not assure that they are valid in all outlets. Stamps supply was entirely limited by the inclusive resources needed to develop them, similar to a centralized bank, and they could print more if the need arose.

On the other hand, there is a limited quantity of bitcoins predetermined by the code used to prepare the mathematical limit. Bitcoins are anonymous as a fact as the only detail behind it is a number hiding the user either as an organization or individual. Any individual who can set the numbers can acquire money from it. This is unlike money that has either to be stolen or earned physically, therefore, whether this innovation was meant to benefit the world, it is yet to be actualized in a market that cash money will continue dominating.

The spontaneous fluctuations against physical cash such as the dollar is not an optimistic sign, value of money should be stable, unlike bitcoins (Fung and Halaburda 7). An argument may be drawn that governments financially burden the general public through money printouts which, of course, could be true. The money emanates from a certain known. If the government does not acquire its money through printing, then it still trickles in through lower spending and taxes. Even where the entire quantity of currency is fixed this is not a direct indication that there is a correlation in the demand and supply of the currency, an anomaly in bitcoins (Karp, Nava and Stacey 8).

In a case where an organization or individual has plenty of bitcoins and decides to convert immediately then in exchange for dollars, this would imply that the entire value of bitcoins alongside all global currencies would plummet. This can be deduced from the consideration that the market supply heightens suddenly at a constant demand. There would be no significant attempt to correct the supply can withhold such a scenario. Physical cash is the legal tender bill of payment for all governments, having the backing of the central bank is support enough that physical cash will continue to dominate the market to the day bitcoin will have government control and backing.

At the same juncture, bitcoin will not reach peak immediately it is universally accepted. Rent a car for physical cash, there could be no guarantee that a legal tender may be used to purchase. The law limits the ability to pay debts or taxes while the ability to purchase products and services using physical cash are the secondary consequences of the importance of dollars to do the same (Carter). One can be sure that with the presence of the physical cash, people will be ready to trade. The human mind is set to deal with what they hold rather than feel a possession of something you may lack control of any day.

Physical cash is guaranteed of physical usefulness as warranted by law making it a source of trusted value. This case is contrary to bitcoins that lack legal guarantee. Bitcoins will hold value only when the general public believe it does of which will introduce guarantee of value. As for inflation, an individual would rather have a predictable inflation target of say 3% with a central bank and government working to reverse the trend rather than a decentralized bitcoin. Most people operate on debt.

How far can bitcoin be strained on debt given its cash limit? Most individuals hold more debt than physical cash provided their income keeps up with the current inflation rate (Mullan 22). Among the main merits of using physical cash, its economic nature from the missing costs to the government rendering it as a cheaper medium of exchange. Physical cash is homogeneous as it is always of a similar kind. Convenience is of paramount important. Not many individuals would desire to purchase a meal on a foreign trip say in Brazil and find that the services of bitcoins are not available while they hold the option of physical cash even in the most remote locations on the planet.

Cheap remittance of physical case from one location to the other is also a backdrop among the benefits of using physical cash. In conclusion, the benefits of using physical cash as the present king of transaction have its reputation preceding it from the listed entities above. From the discussion, cash is king in the age of crypto currency and hold a brighter future counterpart to its bitcoins counterparts. Works Cited Carter Adam. “Bitcoin: Be Prepared for the Rise of Digital Currency, Adopters Say.” CBC. Feb 14, 2014. Web. Casey, Michael J.

, and Paul Vigna. “Bitcoin and the Digital-Currency Revolution.” Wall Street Journal, 2015. Web. Elwell Craig K., Murphy, M. Maureen and Seitzinger, Michael V. Bitcoin: Questions, Answers, and Analysis of Legal Issues. Congressional Research Service, 2015. Fung, Ben and Halaburda, Hanna. Understanding Platform-Based Digital Currencies. Bank of Canada Review, 2014. Karp Nathaniel, Nava Marcial and Stacey Boyd. Bitcoin: A Chapter in Digital Currency Adoption. Economic Watch, 2013. Kudlow, Larry.

“Kudlow: Bitcoin Is Not Money.” CNBC. Feb 28, 2014. Web. 17 April. 2015.