That is a bold question. But for many, including Silicon Valley VC’s, the answer is a resounding “Yes.”
Disruptive innovations and technologies are commonplace for those of us in generations X, Y, and the millennials.
These innovations help create a new market and value network, which eventually goes on to disrupt, an existing market and value network (over a few years or decades), displacing an earlier technology.
From digital cameras replacing film, to cell phones replacing land lines, the last 40 years has been full of one disruptive technology after the other. The hallmark of all, of course, being the internet, which has replaced everything from encyclopedias to postal systems.
But in the field of currency, we have seen very little innovation for centuries. In fact, some would argue, we have taken steps backward by relying on the “Full Faith and Credit” of any government issuing a fiat currency. This is especially true of Libertarian groups and early adapters to the Bitcoin community.
This is surprising, given currency is one half of every single transaction on the planet. So the question remains: When will Bitcoin (or another crypto-currency) disrupt the current fiat currencies of the world?
According to Max Wright, Author of The Bitcoin Revolution, the answer may be much sooner than any of us expect. “There may be some question as to whether Bitcoin has the ability to meet the definition of money, but it certainly meets the definition of currency. There is no doubt about that. And in a globalized digital economy, there is no doubt it is an infinitely superior currency than anything else we have available today.”
Wright estimates that Bitcoin will go mainstream in the next 24-36 months if Governments don’t wage a full attack on the currency. Bitcoin’s advantages over traditional banking and credit systems are undeniable. Bitcoin has zero transaction costs, which is a huge advantage over our existing credit card, pay-on-line paradigm that incurs fees of 2-5% on every transaction.
Lets use Amazon as an example. Their net profit margin on total sales is 1.7%. If the credit card fees were eliminated, because transactions were carried out in Bitcoin, then their profits would more than double and $1 billion would be added to their bottom line. So, if Amazon or any other online business offered Bitcoin as a payment option, their profits on every single Bitcoin transaction would double.
In Wright’s mind, there is no doubt that these efficiencies are so superior that mass market adoption is inevitable.
“But I must warn you” he says “While the adaption curve of Bitcoin as a currency will be nice and neat and very exciting as we approach the tipping the point, the price of Bitcoin will be anything but.”
As we have seen in the last few months, the Bitcoin price skyrocketed to $260, only to crash back down to below $100. The ride back up has also been bumpy. This is due, in part, to huge speculation in the Bitcoin marketplace, which did not exist with other disruptive technologies.
For example, when people began adopting digital cameras, no one felt like they were missing out on the opportunity of a lifetime when their friends got a Digital camera months before them. No one borrowed money they didn’t have to buy 10 digital cameras, because their friends bought a digital camera last week and made money.
“As I explain in The Bitcoin Revolution, that is because the emotions of greed and fear are not at play with Digital cameras.” Says Wright.
So, as we move along the Bitcoin adaption curve, the value of Bitcoin may rise quickly, but due to greed and fear, the price may fluctuate violently with dizzying booms and soul crunching busts. And while it is yet to be seen exactly when Bitcoin will go mainstream, there is certainly good reason why it should.
About Wright: Wright is a Libertarian internet entrepreneur and author of The Bitcoin Revolution: Ending Tyranny For Fun and Profit. He is the co-founder of Success Council, an online platform teaching people how to profit from times of economic crisis.