With widely used fintech platforms like Square‘s (NYSE: SQ) Cash App a PayPal (NASDAQ: PYPL) allowing its tens of millions of users to go through, sell and hold bitcoin, investor interest in cryptocurrencies has soared. But what about everyday Americans? Will people ever use cryptocurrencies as a primary means of paying for goods and services, or as a store of value?
In this November 30 Fool is Alive video, two of our financial sector experts are pondering. Hear what Fool.com contributor Matt Frankel, CFP, and Jason Moser, host Industry Focus: Finance, you have to say about what stands in the way of adopting mainstream cryptocurrency.
Jason Moser: But he also feels that there are challenges to crypto, at least in the near term. You mentioned it in relation to mainstream adoption. Now, maybe that clears up, maybe as time goes by, maybe that adoption as a medium of exchange, maybe that’s becoming a little more common. I don’t see a big reason today why I need to go to the store and pay for something with bitcoin. I mean, there doesn’t seem to be any real benefit, but I mean, given what we know today, given the small steps these companies are taking, it feels even mainstream adoption at present may not even matter.
Matt Frankel: Well, as far as mainstream adoption as a currency, there are two use cases. Adoption is both a currency and a historical value. As a currency, I see three main obstacles to truly adopting bitcoin as mainstream. One, it’s very relatable. You don’t want to buy a kind of currency that could be worse twice or half as much in a week. If you don’t think bitcoin could do that, take a look at some of the charts from the past few years, bitcoin going up or down a few thousand dollars in a week. So that’s another thing, the volatility scares people away. Number two, there are too many cryptocurrencies and it’s easy to make a new one. When I checked just before we were on the show, there are currently over 4,100 active cryptocurrencies. Most of them aren’t big, but there are many big ones. There are over 10 that have a billion-dollar market cap or higher. There are a lot of cryptocurrencies out there, and it’s pretty easy for organizations if they want to, to make their own. The idea of bitcoin at first was one central currency. But if 4,000 of them float around, it defeats the purpose. Number three, as you mentioned, there are some very easy ways to pay with US dollars right now.
Moser: Sure.
Frankel: With many of these innovations, I’m tapping my wallet on a card reader in some places now and can make a payment. US dollars are no longer so hard to use.
Moser: No.
Frankel: In my mind, in order for bitcoin to have mainstream acceptance, it needs to do something you can’t do with dollars. What I find is that there is a lot of use case for international money transfer and things like that, but between volatility and the fact that there are literally thousands of them, and innovations in fintech on a dollar basis, I can’t really make the mainstream use. own case, but many people probably disagree because bitcoin is worth $ 359 billion out there right now and is now over $ 19,000 a piece, so I guess if some people agree and they are buying.
Moser: Well, yes, it could certainly be argued that there is a lot of speculation in that market. I’d be willing to bet that many market speculators don’t understand exactly how it works. I can’t sit there and say that I really understand how it all works. My basic understanding is that although there is a set amount. There is a fixed amount of Bitcoin. If you have something that is limited in supply, that will obviously make a difference in something like dollars, for example, as we have seen, not limited in supply.
Frankel: That’s the big argument for bitcoin being a store of value is that it’s essentially inflation-proof in that sense. US dollars, the government can always print more of them, which they do quite regularly, and with bitcoin, that’s not true. There is a limited amount. As a store of value, it could make sense. But if that’s the big use case, then who cares if you can use PayPal merchants if it’s just the value store? Bitcoin may decide which way it will go, and assume that I cannot present a use case for owning bitcoin as a store of value over gold at present, nor can I make a case for using it as payment over the UD. dollars.