Gephardt: Is Cryptocurrency Actually A Viable ‘Currency’?
MIDVALE, Utah – Bitcoin. Dogecoin. Ether. Digital dollar options are expanding. Their volatile values are setting record highs and lows. As more companies accept digital currency, are people actually spending it?
Bernie and Brothers Barber Co. in Midvale will take cash, cards, or if you like, Bitcoin.
“It’s the currency of the future,” said owner and barber, Bernie Hiett. “I wanted to be the first on it!”
Hiett loves the idea of cryptocurrency and its decentralized nature, specifically the part that allows her and her patrons to cut out the middleman.
“You’re not really paying a bank or a credit card processor – anything like that,” she explained. “So, it’s a good way to kind of skip that.”
Cryptocurrency is sort of like cash, but instead of handing off a dollar bill, you hand off a piece of computer code. Unlike a dollar, which has a fixed value, crypto is decentralized, meaning it is not tied to any physical coins or bills and there is no central authority overseeing its value.
So how much is a bitcoin worth?
Good question, as we discovered when we tried to pay Bernie and Brothers the equivalent of $10.
In the time it took to open a cryptocurrency exchange app, scan a QR code and click send, the value went up by $0.07 – almost a 1% increase in just 90 seconds.
That volatility is the reason you have been hearing a lot about cryptocurrencies lately.
On April 1, 2020, a single bitcoin was worth $6,671 according to CoinDesk. By April 15 of this year, its value shot up nearly tenfold to $63,346. That value plunged to $48,542 just 10 days later.
While 7 extra cents on a $10 transaction isn’t a big deal, such flux does make cryptocurrency tough to spend.
Which begs the question: Is cryptocurrency really a practical currency?
“That has definitely dampened its adoption for currency purposes, like for paying for haircuts, buying pizzas and buying real estate,” said Scott Condie, associate professor of economics at Brigham Young University. “When someone gives you cryptocurrency, you don’t have a good sense for exactly what that will buy five minutes from now, or an hour from now, or a week from now,” he explained.
Investment vs. Currency Condie sees cryptocurrencies more as a long-term investment than a currency.
Most Bitcoin owners seem to agree. A recent MoneyMagnify survey found 62% of people who have cryptocurrency believe it is their ticket to wealth. Still, if you want to use it as a practical currency, no question – more companies will take it, including Starbucks, Tesla, and even Utah’s own Overstock.com, which has accepted it for years.
“I do think Bitcoin is a viable currency,” said Overstock CEO Jonathan Johnson.
“At Overstock, we see people using it every day.” Though Johnson admitted, it is not a lot of people. “It is still a very small percentage of our sales, about a quarter of 1%,” he said.
Johnson explained the number of people buying their furniture, appliances, and other goods in Bitcoin fluctuates with the cryptocurrency market itself.
As its value drops, people spend the digital currency. When the value skyrockets – not so much.
“People view it as an investment holding, and I think they are hesitant to spend it because they want it to go up,” he said.
Exactly how many customers have paid with Bitcoin at Bernie and Brothers barbershop? Two, if you count me. Still, Hiett remains a believer that crypto will be a mainstream currency in the not-too-distant future.
“I think it will be pretty commonplace at some point,” she said. “It’s a workable currency right now so I don’t see why you wouldn’t take it.”
One thing you should know: If you decide to buy into cryptocurrency, you will get a key – a password of sorts.
If you forget it, tough.
In fact, a recent analysis by the cryptocurrency-data firm Chainalysis found $140 billion worth in bitcoin could be lost forever, due to forgotten passwords.