Bitcoin as a Form of Money: Barriers and Possibility of Success

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The adoption of cryptocurrencies has been on the rise in the recent past. The most widely
adopted include Bitcoin, ethereum, litecoin, stellar and ripple. With this increased adoption, there
is growing uncertainty in the future of these currencies (Andrews, 2018). This report evaluates
Bitcoin as a form of money. It explores the currency’s barriers and its possibility of success.
Can Cryptocurrencies replace money?
For cryptocurrencies to supplant central bank currencies, much will have to change.
However currently, there is no likelihood of cryptocurrencies such as Bitcoin replacing money
First, Government approval is a key determinant. There has been a varied opinion on the
use of Bitcoin by various governments around the world. For Bitcoin to be widely adopted
therefore, the public will need to be certain that their involvement and dealings with Bitcoin will
not get them into trouble with the government (Comben,2018).
Price elasticity: Supply and demand. Unlike conventional currencies, Bitcoin has a
predetermined supply which is expected to start declining until a certain known limit is reached.
For this reason Bitcoin is a currency with an inelastic Supply making it a deflationary
currency(Comben,2018). The high volatility associated with Bitcoin is based on the fact that its
change in demand is reflected through a change in price.
Thirdly, Lack of regulation is one of the main reasons why the adoption and use of
Bitcoin have remained on the low. Lack of regulation makes people susceptible to crimes (Briggs,
2017). The fact that it might not be possible to regulate the use of Bitcoin therefore means that
many people are likely to stay away.