Is Big Business Against Crypto?

Bill Gates recently expressed his opinion about crypto and what he had to say was not very favorable. Here is what he said in his exact words:

As an asset class, you're not producing anything and so you shouldn't expect it to go up. It's kind of a pure 'greater fool theory' type of investment

Going by economic theory the value of a crypto is driven by speculation and not by its equivalent in terms of goods or services. They have a notional value which can vary as per the opinion of the people who are evaluating it.

Fiat currencies have purchasing power which most cryptocurrencies do not. Bitcoin and Ethereum are accepted in a select few places only because they have a high value and have easy liquidity by exchanging it with dollars or other currencies.

Bitcoin is one of the few cryptos that is accepted at some places. But an important factor that goes against Bitcoin is that most of the major online retailers still do not accept it for purchases made on their websites. Once online retailers including Amazon start accepting Bitcoin others will soon follow.

The irony is that Bitcoin was introduced as an alternative to fiat currency in a decentralized environment being based on the blockchain. It was supposed to be fast and secure with minimal fees making it a very cost effective form of payment. But retailers have not flocked towards cryptocurrencies as was expected so far, even after knowing well that there are many who would prefer to pay with them especially with Bitcoin.

The issue that retailers face is that Bitcoin is highly volatile and the values can increase or decrease drastically in a few hours. This would make it very difficult for them to monitor the frequent changes. Moreover the transaction costs are also increasing as against the initial promise that it would be low. Retailers are not comfortable with the cost of doing business with Bitcoin as a form of payment.

Altcoins have not gained the same acceptability as Bitcoin and have not been considered by retailers. Bitcoin is synonymous with cryptocurrency and it could have been considered as a mass payment mode. But with so many issues there is still some time to go before we see cryptocurrencies being listed as a form of payment on many online portals.

The only thing that Bill Gates appreciated is that the technology behind Bitcoin does have some value. He appreciated the fact that its use cuts out middlemen which can bring down costs. He also said that transactions can be more secure using the technology.

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