It’s here! Yesterday, the Chicago Board Options Exchange (CBOE) launched its bitcoin futures trading market. Even if you’re not a currency trader, you may still be affected by the development of bitcoin as an alternative mainstream currency.
For instance, did you know that certain Subway sandwich franchises accept bitcoin payments? Imagine walking up to a Subway counter in the near future, ordering a Veggie Delight on Italian bread, and considering a choice of paying in dollars or bitcoin. With the banking sector on board, you may be able to check your mobile phone’s electronic payment app and identify which currency would be less costly for you.
Not bad, eh? Nevertheless, you must also keep in mind that a currency is only as trustworthy as the entity that manages it. The Federal Reserve System and the Treasury Department of the United States, for instance, have been managing the American dollar for more than a century.
Bitcoin, in contrast, has no national government to manage it. Instead, the public relies on the five year old Bitcoin Foundation to:
“coordinate the efforts of the members of the Bitcoin community, helping to create awareness of the benefits of Bitcoin, how to use it and its related technology requirements, for technologists, regulators, the media and everyone else globally.”
But the Foundation has never been tested at a time of economic turmoil.
Furthermore, Bitcoin was launched in January 2009 when the global economy was crashing. At that unique moment in time, a fledgling currency like Bitcoin may not have seemed like a riskier bet than the currencies of collapsing nations. But today, our global economy and its national currencies are relatively stable.
So should you trust the cryptocurrency? By all means, if you’re an early adopter, please feel free to open a small Bitcoin account and purchase an occasional Subway sandwich with its funds.
But if you’re considering a far more significant investment in the currency, you may wish to think again. Although bitcoin is indeed gaining mainstream acceptance, it is still very much a recent offspring of the Great Recession. And it hardly even begins to possess the history and the durability of the American greenback.