Lyn Alden, one of the renowned macroeconomic experts, maintains a skeptical view on Bitcoin's potential as an official medium of exchange in the global economy. Although Bitcoin has made a strong impression on many as an investment tool and a store of value, Alden does not yet believe it will become a widely accepted medium of exchange. She explains this viewpoint in a new analysis, indicating that current Bitcoin is only useful for individuals and organizations facing specific payment issues.
Bitcoin is a solution to some payment issues, but not all
Alden remarks that for those facing specific payment issues, such as capital controls or being excluded from traditional payment platforms, Bitcoin can be a useful tool in certain situations. However, she also points out that these individuals could entirely choose less volatile alternatives, such as stablecoins, when needing to conduct short-term transactions. With high stability, stablecoins may be a more reasonable choice compared to Bitcoin, especially when users do not want to endure significant price volatility.
Alden also notes that, while some Bitcoin advocates are trying to persuade investors to spend more, she does not believe that is a viable and sustainable strategy.
"Bitcoin will never be favored as a charitable organization," she asserts.
According to Alden, for Bitcoin to become a widely accepted medium of exchange globally, it needs to address issues that other alternatives cannot meet. This is particularly important in the current context, where capital gains tax applies to all transactions and the existence of more stable alternatives like stablecoins.
Bitcoin: A portable store of value and the truth about its future
While maintaining a cautious view on Bitcoin's ability to become a global medium of exchange, Alden cannot deny Bitcoin's value as a store of value. According to her, Bitcoin is not only a financial asset but also an ‘option’ that offers many benefits to holders, especially regarding mobility and cross-border payment capabilities.
Bitcoin: A mobile value option
Alden believes the true value of Bitcoin lies in its ‘optional’ nature. Unlike traditional assets, Bitcoin allows users to possess a store of value that can be easily converted and used anywhere in the world without relying on financial intermediaries or traditional credit systems.
"Having a portable, liquid, and interchangeable store of value is a significant advantage for users," Alden shared.
According to her, Bitcoin holders can carry their value anywhere and conduct cross-border transactions without much friction. Although not everywhere can payments be made directly with Bitcoin, in many cases, users can still convert Bitcoin to local currencies to facilitate transactions easily.
Bitcoin: A cross-border payment tool
Bitcoin also allows holders to make international payments without going through financial intermediaries. This is a particularly important factor for those needing to transfer money abroad or participate in cross-border transactions. Alden states that while Bitcoin cannot completely replace traditional payment methods, it can still play an important role in situations where conventional financial systems cannot meet the needs.
The future of Bitcoin: Not an official medium of exchange
While acknowledging the value of Bitcoin as a store of value and a cross-border payment tool, Alden emphasizes that Bitcoin is unlikely to become an official medium of exchange in the near future. One of the main reasons is the strong price volatility of Bitcoin, which makes it not an ideal choice for everyday commercial transactions. Additionally, the emergence of more stable alternatives, such as stablecoins, further clouds this prospect.
According to Alden, for Bitcoin to become a widely accepted medium of exchange, it must address the challenges that current solutions cannot meet, especially in the context of capital gains tax and increasingly stringent legal regulations. Nevertheless, she acknowledges that Bitcoin can continue to play an important role as a store of value and a payment tool in special situations where traditional methods cannot operate effectively.
In summary, Lyn Alden believes that Bitcoin retains its value but cannot become a popular medium of exchange in the near future. With high volatility and the emergence of more stable alternatives like stablecoins, Bitcoin will continue to serve as an important ‘mobile value option’ and a cross-border payment tool. However, the question of whether Bitcoin can become an official medium of exchange remains open and unanswered.