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The Future of Bitcoin as a Payment System

Scott Morris | November 14, 2019
using crypto to shop

Bitcoin has basically transformed the way people send money worldwide. A person can send BTC to another person and have it show up in their account in minutes. People then can trade their BTC for currency like USD at one of many exchanges online. This has made sending money abroad and offshore much easier than previous years when a person would have to utilize the services of a money transfer company, a process which could take many hours and cost as much as 50% of the amount sent in fees.

Money wires through a bank often take days and fees can cost anywhere between $15 and $100. This method of payment has been the most secure in decades past but in the 2000’s they have been increasingly unreliable because of flagged accounts or “suspicious” transactions.

BTC is affordable. Right now you can send 2500 bucks to a person and it costs you roughly .30 cents in fees. This is a microscopic amount as compared to the methods mentioned above.

Many people in North America have bought BTC, not as a way to send money, but simply as an investment. That is because BTC’s value increases with every dollar that is poured into the closed blockchain system. So, we have seen BTC’s vale increase from $185 in 2014 to $20,089 in 2017 (src: coinbase) and back down to $8700 where it is now.

As you may have guessed from that wide range in value, there have been some broken hearts. There are people who sold it when it hit $400, who felt sick to their stomach when seeing it peak just a few years later at 50X their buy-in price. And then there are those who have bought high, and feel that they are basically stuck holding it until it reaches anything near what they paid for it.

But this is what speculation is all about. Speculation is a gamble. You know going in that the price may rise or fall and you have no control over that. But this brings me back to the original reason BTC was created: to send money fast and cheap. Its constant fluctuation has many BTC users frustrated.

is bitcoin the future of money?Recently we learned from one of our readers that they were expecting a payment from offshore. They waited a few days and checked their crypto account and there was no payment received. No problem. They waited a few days more and they checked their account again and this time the payment was there. But there was a problem. They requested a $4500 payout but there was only $3950 in the account. It must have been a payout error, right? Wrong. From the time the payment was sent the day before until the time the receiver checked his account, the value of BTC had dropped from roughly $9300 to about $8300.

The BTC recipient never received an email from the sender nor from his crypto exchange the day prior. So, there he was, left holding the bag and that bag was $550 light. There is nothing he could do. The sender sent $4500. The receiver received $3950. End of story.

Of course, many people who have invested in BTC will say something like “He should just hang tight, the price will return in X number of days.”. But there is no guarantee. Sometimes, BTC doesn’t return to the previous high for months on end and in the case of December 2017 ($19,500) it has never returned. The recipient made it very clear to us he has no interest in speculating BTC and feels horrible that he lost $550 in the process of his transaction.

So where does that lead the course of this article? It is because of hearing hundreds of stories like this over the last five or six years that I have come to the conclusion that BTC may not be the ultimate Crypto everyone thinks it will be. Long term investors say things like “its the originator” or “its in the most locations” etc. But, as far as utility it has a very long way to go. For instance, if you were trying to buy a Coca-Cola with BTC it may not go as smoothly as you would hope. Depending on the traffic on the network it could take hours to complete that transaction. May people will convert their BTC to USD and then use that for every day shopping. But isn’t this function supposed to be one of the selling points of BTC?.. that it can be used as everyday money? Unfortunately for people who believe that, it does not look like this will ever be the case.

I have no doubt that the price of BTC will continue to rise as more and more people move into that investment space. But as far as a crypto that will replace Visa and MC as an everyday financial solution, Bitcoin ain’t it.

The future of money spending will belong to a “stablecoin”. A stablecoin is a cryptocurrency that works to constantly balance its value. It does this by taking on or selling other assets. It will usually peg its value to a well known and stable currency, ie. the U.S. Dollar. And this is really the cryptocurrency of every day use in the not-to-distant future. People want to spend their money and not risk losing it while they sleep.

There are popular stable coins that already exist. A popular stable coin right now is USDT aka Tether. And can you guess how much one coin is? Yep, $1. Another stablecoin that just launched this year that is gaining some notoriety is DAI. This coin was launched on Coinbase earlier this year.

Stable coins appear to be the payment solution of the future so long that they scale and that they are able to complete the transaction in seconds. This will be necessary to compete with the credit card/debit card companies of today.

Bitcoin will retain value as an investment coin. It will start to lose some popularity when speculators realize it isn’t the financial replacement for everyday banking. That may be some years off as no one stablecoin has established itself as THE one.

federal crypto coin?The crypto market is still very young and will be constantly changing. Many coins will come and go. The decentralized nature of crypto is what makes it so unique and appealing to some people, but the stability offered by a central bank or government is what many others desire. The future will belong to two types of coin: (1) every day payment solution stablecoin as well as (2) fluctuating value investment coins that belong in a portfolio (They can still be used to send money where seconds aren’t precious).

There is no doubt governments and central banks will be creating their own blockchain based currency. Will these be the death of BTC as we know it? Time will tell.

So how does this all relate to the theme of this website? Simple. Serious sports bettors are very concerned about fees, vig and anything that will take from the bottom line. Sending and receiving in BTC is not the long term solution for sport bettors because they can lose money during the transaction process. A decentralized, fast-transacting stable coin is the future of online sportsbook (and other) transactions.


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