When you consider traditional forms of money — US dollars, the Euro, Chinese Yuan – you realize these currencies are not backed by anything more than a promise that they will be worth something. Only recently has our money discontinued being backed by gold and other physical assets that could be audited for. People using these forms of money with nothing backing them but debt know that they can purchase food or shelter with them and, thus, it holds their trust. Similarly, once people begin to realize that bitcoin is accepted as a form of payment, it will see a rise in value and increasingly be seen as a legitimate currency. Under this pretense, it is clear that currency is dependent upon a network of institutions that are willing to accept it and investors confident enough to hold it as a medium of exchange.
If bitcoin acceptance reaches a critical mass where necessities of food, shelter, and clothing can be bought with it, it will likely have reached a tipping point where it displaces national currencies. In this scenario, many areas of the world would be leapfrogging banking infrastructure and traditional money wire transfers. Most notably this would describe the financial landscape in developing economies such as the nations of Africa.
BITCOIN LEAPFROGGING BANKSLeapfrogging is described as a theory of economic development which skips inferior or obsolete technologies in order to move directly to advanced ones. Take, for example, phone coverage in African countries. Landlines and grids for household use were never fully developed because, by the time Africa came into market view, mobile phones were the new paradigm of telecommunications and hence, the entire infrastructure for household landlines was leapfrogged by cellular technology. Similarly, bitcoin technology could leapfrog the banking infrastructure of western economies and go directly to a new financial paradigm and serve the needs of the vast number of the unbanked in these regions. All that would be required on behalf of the citizens is a mobile device with internet connectivity.
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