Spending in cryptocurrencies, which are deflationary in nature, is important for the whole model to work. Getting more people to spend in popular cryptocurrencies is vital.
Cryptocurrencies are quite popular these days; there’s no denying that. However, people are less willing to use their cryptocurrency coins and are rather keen to hold on to them and then sell them to others. Most of the coins are held by a few rich people, which reduces the number of coins available for circulation. If spending of coins is facilitated, then things could improve for everyone.
Cryptocurrencies are the way ahead since it allows for transactions between individuals who don’t know each other and might be separated by many borders. It is a simple system that does not involve a lot of time and allows people to circumvent their regional restrictions and regulations to move their money freely. The decentralized and democratic nature of cryptocurrencies is what makes it so attractive. However, people are less inclined to spend their coins because they think it’s deflationary.
They’re right in thinking that, and their reason for not spending is justified. If you spend a lot of coins to buy a certain good, and the price of the coin increases a few days later, you realize you could have got it for much cheaper. But not spending coins will continue this trend over and over. This will keep the cryptocurrency engine locked in first gear. Once people start spending their coins, it will pick up speed to free itself from the shackles that are limiting it. With more spending, there will be more circulation and spreading of the coins. This will also increase the intrinsic value of the coins, something that is definitely required.
To improve spending of popular cryptocurrencies like Ripple and Bitcoin, they need to be incorporated in popular services like Amazon and eBay. These are global services that are used by millions every day. If cryptocurrencies are accepted here, people will be more inclined to use their coins rather than just holding on to them. But just making this option available won’t do. The few who hold the majority of these coins will require something more to part with their coins. Incentives in the form of discounts can urge people to spend on crypto coins rather than fiat.
However, while these steps will improve the scenario for cryptocurrencies and the financial system of the world greatly, a few issues have to be resolved first. Cryptocurrencies face high transaction charges as of now. Bitcoin transaction charges are going through the roof, and many are switching to altcoins as a result. But this could happen with other coins as well, and the issue needs to be handled. But if this problem is solved, and the two methods to facilitate and promote crypto coins spending are implemented, then the future of financial transactions can indeed take the form that cryptocurrencies first promised.