Note: I started this article after a long Cryptocurrency discussion with a friend, but the post ended up being a bit of a ramble so I apologise in advance!
Clickbait? Perhaps. I dont share the view of the post title but someone said this to me the other day and it got me thinking.
Were they actually onto something?
They said;
“Cryptocurrency can never be used in the real world cos the price fluctuates too much. If you sell something and get paid in Cryptocurrency, by the time you cash out it could be worth less!”
And, to a point, this is a true statement.
Let’s pretend you sold a car a month or so ago when the price of 1 bitcoin was $18,000, and let’s say you got 1 whole bitcoin for your car. If you kept that as a bitcoin then today your car only sold for $11,325.10.
You just lost $6,674.90 by doing nothing.
So can bitcoin or altcoins ever be used in the real world?
In my opinion, yes.
I think bitcoin itself has got to a point where it probably cant be used in the real world as a currency, each coin is worth too much and a simple 1% change in its price make a huge difference to people who have invested or mined bitcoin – however I do think that Altcoins can and will be adopted more and more in the real world, as its uncommon for them to SURGE in price like bitcoin did last year.
Lets take something like the Cryptocurrency Ripple (XRP) – the price at the moment is $1.27 so if you had $5000 and you converted it all to Ripple you would have £6350. If you then got some Cryptocurrency debit card that used your Ripple wallet as a source of funding and you went about your day buying normal things and it deducted it from your Ripple balance, there would be no issue with this and you wouldn’t ever really be out of pocket. In fact, I would imagine most days you’d spend less Ripple on the things you buy as the Value of them increased.
From the other side, lets say you sell things and only take payment in Ripple. If your supplier uses USD or GBP and you buy on your Cryptocurrency Debit card mentioned earlier, you spend (EG) 10 XRP which at the time of writing this would be worth $12.70. Let’s pretend you resell this item with 20% on top for yourself, so you would need to sell for $15.24 which is (if my maths are correct) 12 XRP.
So the next day someone buys your item for 12XRP but unfortunately the market has dropped overnight and 1 XRP is now only worth $1.07, suddenly the price you actually sold it for works out at $12.84, which means your profit is 14 cents. You didnt make much but you didnt lose anything, either.
As I was planning this article out I tried to work though multiple examples of using crypto in the real world and they always end up with this kind of “grey” ending where it’s not ideal but then not the end of the world. As the value of these Altcoins changes every day there will always be fluctuation but as they are low value the fluctuation is minimal – some days you dont make as much and some days you make more – its exactly the same when you are buying or selling internationally though. If you buy stock in dollars and sell in sterling, some days you make more money some days you make less. Thats business.
As far as I can tell, the only way an Altcoin will fully be accepted and used as a form of payment is if its adopted by an entire community. If a whole community starts doing all trading with a certain currency then what happens outside that community in regards to the value isn’t really important. This is why ICO’s are a big deal and why they are the catalyst for Altcoin acceptance and popularity. There are coins for the gaming industry, for social media creators and for other niches and those coins in those industries will end up doing very well.
If you’re looking at an Altcoin that promises to be the next best thing and it sell’s itself as just another crypto but its faster and shinier, then it may not end up coming to much. If the Altcoin you are looking at is focused at a specific niche and has been accepted by that niche (or created by it) then chances are it will probably end up doing well.
And if you’re just not sure, then buy a bit of everything and you won’t go far wrong 🙂
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