Last week certainly wasn’t dull when it came to cryptocurrency developments. Between China’s clampdown and JPMorgan boss Jamie Dimon’s comments, the markets took a beating.
Bitcoin’s price plummeted into the red, shaving off almost 32% in under three days. The rest of the sector followed along as well, with the other major cryptos all down.
Bitcoin Price Rebound
Over the weekend the markets bounced back — at least slightly. Bitcoin is still trading well below its all-time high of US$5,000, but is continuing its rebound, sitting around US$3,800 at time of writing.
But what could really see bitcoin take off again?
The debacle of last week continues to focus on bitcoin the ‘financial asset’. Or perhaps rather the legitimacy of bitcoin being used as a financial asset. The problem with this view is that it’s not the one bitcoin cares about.
Bitcoin as a Currency
Don’t get me wrong, it’s an important discussion, and it’s making people a lot of money. In fact, that’s probably why it’s a problem. By making people a lot of money, it has hijacked the real agenda. People only see the 416% gain in price this year. That is their only focus.
Yet bitcoin should always be discussed first and foremost as a currency.
The end-game isn’t seeing one bitcoin worth half a million dollars. The goal is to make those half a million dollars seem as alien to the everyday consumer as one bitcoin is today.
This obviously isn’t something that is going to happen quickly. Bitcoin is less than a decade old; it’s going to have some problems growing up. Especially when it’s trying to beat a system that has been popularised since the late 17th century — fiat currency.
From coins to paper to digital, money has evolved and improved (in terms of functionality) over time. It isn’t perfect, but it’s served us well for a long time. Obviously that’s not something that you can give up lightly.
Buy Goods & Services with Bitcoin?
But as bitcoin flourishes, and shows why it can be better than fiat currency, we’re positive people will come around to championing cryptos. It’s already happening, and it’s the real reason why we’re big on bitcoin. When you can buy everyday goods and services with bitcoin, that’s when it will truly shine.
Some retailers have already taken the plunge. There are also plenty of online stores that will happily accept bitcoin as tender. But the day we can buy a bag of groceries at Woolworths or Coles with bitcoin will be a significant turning point.
In Cape Town, South Africa, that day has arrived. Pick n Pay is South Africa’s second largest supermarket chain. One of its flagship stores is now offering bitcoin transactions. All you need is a phone and wallet app.
The team behind the pilot program are calling it ‘potentially a world first for a major grocery retailer’. It’s certainly a great step forward for bitcoin and its supporters. While Pick n Pay didn’t comment on any further plans for bitcoin payments in other stores, clearly the company is interested. Jason Peisl, Pick n Pay’s Head of Point of Sale and Payments, comments:
‘At Pick n Pay one of our key values is to embrace change and encourage innovation and leadership. To deliver on that promise we are constantly working with our technology partners to find ways in which we can deliver valuable, innovative services to our customers. Cryptocurrency and Bitcoin are still relatively new payment concepts, yet we have been able to effectively demonstrate how we are able to accept such alternative payments.’
These are the developments that will ultimately shape bitcoin’s future: A fully-realised digital currency for our digital age. It might not compete with headlines about massive price gains or losses, but it could certainly impact bitcoin’s price.
Bitcoin isn’t an investment, it’s a revolution — a secret revolution that could be extremely lucrative.
Junior Analyst, Money Morning