Predicting the future of Bitcoin in the current situation is not easy. However, we can consider several conditions. From the perspective of daily life, Bitcoin seems to be perceived more as a peculiar investment asset rather than as a currency. There are few offline stores that accept Bitcoin, and there are no places that maintain accounting ledgers using Bitcoin as the primary unit. Moreover, historically, the volatility of its value has been quite high, making it challenging to serve as a stable store of value.

Unless these issues are resolved, Bitcoin will likely be perceived more as an investment asset than a currency. Ironically, the reason Bitcoin can become an investment asset is because it is perceived to have the potential to serve as a currency. If it fails to fulfill its role as a currency, its value could literally become ‘virtual data.’ While sudden shifts in perception leading to value loss are rare in economies, they are not impossible. However, such a scenario would likely require specific conditions to be met.

It’s essential to remember that Bitcoin is not a physical asset but a credit asset. If Bitcoin cannot be used as real money, how many people would actually use it? All currencies are credit assets. However, unlike traditional currencies whose value is generally preserved as long as the country does not collapse, cryptocurrencies like Bitcoin can lose value due to factors other than institutional credit. While it’s challenging to pinpoint the exact factors that could evaporate Bitcoin’s value, if the majority of people worldwide come to view Bitcoin as worthless, then it would indeed lose its value. Additionally, like all currencies, Bitcoin can experience inflation or deflation, leading to fluctuations in its value. Therefore, careful consideration of these factors is necessary.

However, considering the problems with the current monetary system, it’s challenging for fiat currencies to maintain their value (purchasing power) beyond the present moment. The quantitative easing monetary policies implemented globally in response to events such as the 2008 subprime crisis and the 2020 COVID-19 pandemic have visibly weakened the purchasing power of fiat currencies. As trust in fiat currencies declines, confidence in alternatives like Bitcoin increases, leading to a competition of trust between the two as to which better preserves users’ purchasing power.

Bitcoin’s future valuation may also be influenced by its deflationary nature. While traditional currencies like the dollar are typically subjected to inflationary pressures, Bitcoin’s issuance roadmap is algorithmically determined, allowing for predictability. Some argue that Bitcoin issuance may continue until it stops, and the total number of BTCs in existence can be predicted decades into the future. Thus, inflation or deflation may occur due to changes in the availability of goods and services in relation to Bitcoin. However, until now, deflation has been much more significant than inflation in the Bitcoin ecosystem. This suggests that Bitcoin’s circulation may be insufficient, possibly due to speculative hoarding rather than genuine economic growth.

However, it’s an error to assert that just because there is deflation, Bitcoin cannot function as a currency. For example, Milton Friedman’s Friedman rule suggests that nominal interest rates for currency should be 0%, i.e., causing deflation. Additionally, one reason countries induce inflation is for indirect tax collection purposes, a need that Bitcoin does not have. If Bitcoin is actively used but its economy grows faster than its availability, natural deflation may occur. Considering the quantity theory of money, where the money supply is determined not only by the issuance volume but also by the ‘velocity of money,’ if deflation occurs in Bitcoin despite continuous mining, it indicates a shortage of Bitcoin circulation. This could be due to Bitcoin being perceived as a speculative asset rather than a currency, or the Bitcoin economy not yet exhibiting significant economic growth.

However, it’s essential to remember that just because there is deflation, it doesn’t mean that the currency cannot be circulated. For instance, even though the Korean economy is undergoing deflation, it’s still functioning. Likewise, while Bitcoin may become an alternative currency, it’s unlikely to replace dollars, yen, or euros entirely. Instead, it will likely serve as a complement to existing currencies, addressing their shortcomings. Moreover, Bitcoin’s technology itself holds promise, particularly blockchain systems that allow for decentralized verification of transactions without centralized servers. These systems are emerging as alternatives to current online transaction authentication systems and are showing promise.

Overall, predicting the future of Bitcoin itself is uncertain. However, regardless of Bitcoin’s fate, the technology behind it holds promise. Particularly, blockchain systems offer a decentralized alternative to current transaction verification systems. As such, while Bitcoin may not entirely replace traditional currencies, it could serve as a valuable complement, addressing their shortcomings.