Although more and more businesses are beginning to accept cryptocurrencies as a form of payment, there is still much debate surrounding whether or not they will become widely accepted as a mainstream currency. This article will discuss the potential for cryptocurrency to become an accepted form of currency, as well as the challenges and barriers that may prevent this from happening.
Unit of Account
One of the key factors in determining whether or not a currency is widely accepted is its ability to act as a unit of account. This means that it can be used to measure and compare the value of goods and services. Currently, most cryptocurrencies are highly volatile, meaning their value can fluctuate greatly in a short period of time. This makes it difficult for businesses and consumers to accurately determine the value of goods and services when using cryptocurrency as a unit of account.
For cryptocurrencies to become widely accepted, they would need to become more stable and have less volatility in their value. Thus, stablecoins, which are cryptocurrencies backed by a stable asset such as fiat currency or gold, may have a higher chance of becoming an accepted form of currency due to their stability.
If the world begins pricing goods and services in SATs (the smallest unit of bitcoin) for example, it could potentially pave the way for cryptocurrency to become a more widely accepted unit of account. However, this mental shift could take time and moving away from fiat currency as the dominant unit of account may prove to be a challenge.
Medium of Exchange
Another important aspect of a widely accepted currency is its ability to act as a medium of exchange. This means that it can be easily and efficiently traded for goods and services.
One of the main features of cryptocurrency is its ability to be easily transferred between individuals without the need for intermediaries, such as banks or payment processors. This decentralized nature of cryptocurrency has the potential to make it a more efficient medium of exchange compared to traditional forms of currency.
With the lightning network and layer-2 scaling solutions being developed, the transaction speeds of many cryptocurrencies have also significantly improved, making them even more viable as a medium of exchange. Education on how to use and transact with cryptocurrency would also play a crucial role in its adoption as a medium of exchange.
Monitoring During Volatility
Whether crypto remains a highly volatile asset or stabilizes in the future, effective monitoring and risk management strategies will be necessary for its success as a medium of exchange. This is where powerful crypto portfolio management software such as Moonrig.io comes into play. By using Moonrig.io, investors and traders can easily monitor crypto in real time and get instant crypto notifications for their holdings, enabling them to make timely and informed decisions.
