Cryptocurrencies on course to prove sceptics wrong

In fact, Bitcoin & other cryptocurrencies are already equipped to fulfil one of the three criteria that characterise fiat currencies, which is a store of value, according to the authors of the 24-page study, Professor William Knottenbelt and Dr Zeynup Gurcuc.

However, they have yet to comply with the two other criteria: 1) Medium of exchange or facilitating the exchange of goods and services by eliminating the inefficiencies associated with a barter economy, and 2) Unit of account or acting as a measure of value in the economic system.

In other words, they need to be improved in several aspects such as design and scalability and require regulation. The study notes that another deficiency is that the underlying technology, the blockchain, cannot handle high transaction volumes. Digital currencies will be required to adopt more user-friendly characteristics. They also need higher price stability.

Knottenbelt and Gurguc highlight that money has evolved, rendering previous or older forms of barter obsolete. “There’s a lot of scepticism over cryptocurrencies and how they could ever become a day-to-day payment system used by the man on the street. In this research we show that cryptocurrencies have already made significant headway towards fulfilling the criteria for becoming a widely accepted method of payment,” they conclude.