Before we talk about how Bitcoin can replace fiat currencies, we need to understand the difference between the two. For fiat currency or traditional money, we see the central banks as the key players bringing the coins. On the other hand, the BTC holder is free from the central banks as virtual money is free from such things. They can quickly transfer virtual money without hassle or huge transaction amounts incurred via banks or any financial institution.
We can see Bitcoin holders transferring BTCs to another account using the Bitcoin member exchange with different goods and services. However, with the issue of inflation, we can quickly bring down the actual value. However, we find the face value remains at par with Bitcoin. Well, we will be discussing it more in the following paragraphs. However, if you intend to dig in deep, you can always visit the sites like -patterntrader.
If you look at natural and virtual face value, the face value will remain the same. We find the face value changes for the Bitcoin cases compared to the real ones. The recent splitting of Bitcoin works as per the share split is seen in the stock market. We find companies splitting the two and then the three that further depend upon the market value. It further is going to boost up the transaction value in a big way. Hence, we see the value going down with the intrinsic value with time. However, in the case of Bitcoin, we see the intrinsic value of Bitcoin in high demand.
Eventually, we can find Bitcoin hoarding to help people profit. Besides, the consumers enjoy several other benefits with Bitcoin as they enter the market. In this context, Bitcoin acts like an asset that helps boost the value and reduce the price volatility. In fiat-based currencies, we see the supply goes as per the market. It moves to people who at times act like central banks.
When you buy Bitcoin, it only comes from someone selling to you for any value. The value is decided by the BTC market and even by the sellers. If you find too many buyers than sellers, you can find the price going up. Thus this means BTC behaves like a digital commodity. You can easily hoard it and later sell it away for a good profit. Also, we can find other ways of getting Bitcoin with the help of mining. The mining process helps the transactions with proper verification and thus adds the proper public ledger using the technology called Blockchain. This process helps people in earning reasonable Bitcoins as a reward.
The big question is, how much liquid is Bitcoin? It would depend upon the total volume of transactions coming in it. Also, in the stock market, we can find liquidity acting like a stock that relies on several factors acting as a value of any company, supply, demand, and free float. If we talk about the case of Bitcoin, it acts at a cost. The coin has high volatility in terms of its price, and it usually comes up with less floating value. This very value of the currency would rely on the people's experiences found in BTC transactions. You can even find some interesting feedback from the members that further helps in improving the system.
Bitcoin is regarded as private virtual money and has no potential to become a complete kind of currency or have any legal sanctity in the market. We see people holding Bitcoin act like a private tribunal for settling their issues that come via Bitcoin transactions, and they act as legal status. Thus if such coins gain legal status, you are bound to gain the power. It will help people to buy anything in the world.
Despite the popularity and dominance of Bitcoin in the digital currency market, we see many more things stay away from this coin. Thus the chances of making Bitcoin a legal tender or replacing it with fiat currency remains debatable. Yet, we have examples of a few nations that have made Bitcoin their legal tender. It will take time to make Bitcoin the legal thing.