Future Possibilities of Bitcoins

Cryptocurrencies, like the ever popular Bitcoins, and perhaps Litecoins and others, as anonymous digitally-driven payment mechanisms, are here to stay. There is a demand for such a financial product from many quarters and is inevitable that something steps in to fill the demand.

Bitcoins could become the standard digital currency, but there are some difficulties to overcome before this can happen. First, and perhaps most importantly, the extreme volatility in bitcoin prices damages their value as a currency. If this volatility can be reigned in and a stable market established, bitcoins could well become the credit cards of the 21st century, except much easier to use and with, to date, no transaction fees. Second, bitcoins must be accepted by governmental financial institutions as well as the shadow banking industry, and Bove argues this process is already underway.

Bitcoins could become monopolized by a foreign power such as China, and argues this is a real possibility. If this happens, the Chinese will have gained control of an international transaction device that can be utilized outside of the dollar and the control of the United States government. This is strongly desired in multiple nations and would not be good for the United States.