You have probably heard of Laszlo Hanyecz who used his Bitcoins to buy two Pizzas. The story now resonates with many people. They either spent their Bitcoins years ago to buy cheap items or simply lost their Bitcoins.
Such stories have changed the way people view Bitcoins and use them. Instead of using bitcoin as a digital currency to buy and sell stuff, most people are doing the opposite.
According to Bloomberg, most people are not interested in using Bitcoin to shop online.
Instead, they are using it to speculate and hope that they will cash out later when it appreciates as it did towards the end of 2017. The transactions peaked around September 2017, when the trade volume was around $411 million.
According to a report published by Chainalysis, merchants accounted for only 1.3% of all Bitcoin transactions. The rest of the transactions, at 98.7% happened on cryptocurrency exchanges. Chainalysis Inc. got its data after analyzing transactions from the first four months of 2019.
Why Bitcoins Users Choose it Over the Dollar
What that means is that a super majority of Bitcoin owners are hodlers. These are bitcoin users who are only interested in using Bitcoin as a safe digital asset.
They see dollars as being the “bad money” and Bitcoins as being the “good money.” However, their view is not baseless – thanks to how the federal monetary system works.
In the case of the U.S. dollar, the Federal Reserve designed the dollar issuance system in such a way that it makes the dollar lose 3% of its value annually.
Every time the Federal Reserve lends money to Federal banks such as JP Morgan Chase or Bank of America to expand the money supply, your dollars depreciate by 3%.
Satoshi capped the supply of Bitcoin at 21 million, meaning its value can only appreciate over the long-term. In a period of 20 years, your savings “get chopped” in half, which you then see as doubling of prices.
With that in mind, many institutional investors and retail investors may start to invest in Bitcoin, as an alternative to gold. It will be interesting to see how the usage of Bitcoin changes as its vale continues to appreciate.
Bitcoin in the market
Bitcoin is presently trading around $8551 with a price downturn of 2.2%. The digital currency was trading around $8800 yesterday before moving downward earlier today.
There is hope that Bitcoin will return to its formal position and even go beyond the $9,000 mark, going by the widespread predictions by market analysts.