Bitcoin first appeared in 2009 as a novelty. It wasn’t long before it became a toy. Then hedge funds and serious investors began to take notice. More and more often, the applications of Bitcoin take on a maturity that makes its previous lives seem very quaint. Where does the world stand on the adoption of Bitcoin?
Bitcoin Adoption Continues to Grow
The number of major companies accepting Bitcoin continues to grow. In addition to major companies accepting Bitcoin as a method of payment, many charities and nonprofits accept Bitcoin. This is one area where the adoption of Bitcoin has been particularly swift. One of the main reasons for this adoption is that the U.S. Internal Revenue Service, the government entity which handles taxes, classifies Bitcoin as property. So when someone donates bitcoin that has gained in value to a 501©(3) nonprofit, they don’t have to pay capital gains on it. This means that people can donate more in bitcoin than they can in fiat currency. Since this is a win-win for both donors and nonprofits, momentum has been growing for some time for nonprofits and charities to position themselves where they can accept Bitcoin.
In terms of major companies that have adopted Bitcoin, some big names are on board. AT&T accepts Bitcoin payments through BitPay. Overstock (previously known as Overstock.com) started accepting cryptocurrencies in 2017. They do not only accept Bitcoin but also Ethereum, Litecoin, Monero and Dash. PayPal, Subway and Expedia are also accepting bitcoins as payment for goods and services. Newegg has accepted bitcoin since 2014. This may be due to the more tech-savvy clientele that the computer retailer enjoys. Microsoft has vacillated back and forth a few times on accepting Bitcoin. This apprehension has been blamed on Bitcoin’s volatility.
It is not just large corporations that are opening up to Bitcoin. A survey performed by the Hartford Steam Boiler found that one-third of all small- and medium-sized businesses in the U.S. accepted Bitcoin as a form of payment for goods and services.
Bitcoin Adoption Will Likely Increase as Younger Generations Take Greater Role in Economy
If you like this article, check one of our previous in-house articles, “What is Sound Money and Why it Matters?” By Kenny Fowler
Bitcoin and all cryptocurrencies are still in a stage of development very much defined by speculation. This speculation is partially a function of the volatility that currently exists in the Bitcoin market. Volatility represents opportunity as it relates to speculation. Certainly, the more price moves, the more profit can be made.
Bitcoin is the most reputable of the cryptocurrencies. However, cryptocurrency in general does not hold a very high reputation overall in the world of finance. Younger generations are generally much more open to cryptocurrency. This is in contrast to many older people who label Bitcoin as a “scam” or continually ask “what can you do with it?” It stands to reason that as younger generations move through life and make up a more significant part of the economy, the use of cryptocurrency will become more trusted and more widespread.
Older and less tech-savvy individuals are usually the least comfortable with Bitcoin. Onboarding these individuals can be challenging, but devices like the Census Note—a cryptocurrency wallet with the form and size of a payment card—can be conveniently carried and are easy to use. Devices like this could help speed the adoption of Bitcoin use among groups outside of the current stereotypes.
Adoption of Bitcoin is Strong in Particular Areas
Adoption of anything that’s new is never uniform, especially when it’s a free movement not imposed by force. Bitcoin is no different, as there are pockets of Bitcoin adoption all over the world.
San Francisco is home to cryptocurrency exchanges Coinbase and Kraken, and a young, tech-savvy population. San Francisco is perhaps the most Bitcoin-friendly city on the planet, with over two dozen merchants who accept Bitcoin. The city also boasts 19 Bitcoin ATMs. Amsterdam, London, New York, Vancouver, Tel Aviv and Ljubljana, Slovenia are often cited as hotbeds for Bitcoin adoption.
The recent fiat currency failure in Venezuela has made it something of a Bitcoin hotbed as of late. The city of Buenos Aires has 11 Bitcoin ATMs. Volume on LocalBitcoins showing Bitcoin purchased with Argentine pesos has steadily risen since January 2018 and peaked in April 2020, as the Argentine government seemed poised for default. The inflation of Argentine peso has spiraled to such an extent that the volatility of Bitcoin is actually low compared to the local currency.
The COVID-19 Pandemic and Government Response Could Spur Bitcoin Revolution
As the coronavirus pandemic has created havoc over much of the world, central banks have rushed to help support those trapped at home due to lockdowns and quarantines by increasing the fiat money supply. This is tricky business, and if the increased money flow is overkill it could cause massive inflation in many parts of the world. At that point, Bitcoin could be more appealing not only as a store of value to preserve the value of your money. If business owners and vendors are also worried about the price stability of the local currency, they too will prefer Bitcoin to fiat.
Bitcoin has come a long way in the last decade. While the adoption of Bitcoin continues to grow, it is still quite slow. Bitcoin adoption will likely increase in the coming years simply as a result of younger generations coming of age. The potential for more convenient technology making a difference in adoption also exists. The use case of cryptocurrency as a store of value and medium of exchange is strong in areas with high inflation such as Venezuela and, depending upon how the intervention of central banks go, potentially the entire the post-COVID19 world.