The user base and market cap of bitcoin are larger than most fiat currencies of small countries in Central America, Africa and Europe. The next step for bitcoin is to surpass the market cap of reserve currencies, to establish itself as the global currency used by mainstream users and general consumers.
The truth is, bitcoin as a technology is not capable of surpassing the value or user base of reserve currencies as of yet. Various scaling issues have to be addressed and solutions must be implemented. One of these solutions is Bitcoin Core’s Segregated Witness. If both the on-chain capacity and two-layer solutions of bitcoin are expanded and improved, bitcoin will be able to compete with larger fiat and reserve currencies of the world.
Still, the bitcoin network has demonstrated a significant rate of growth in terms of market cap and user base. Most notably, Blockchain, a popular bitcoin wallet platform, recorded over 6 million new users in the past 12 months. Other competing wallet platforms such as Coinbase have also shown a rapid growth rate, with the Coinbase wallet platform serving over 6 million users.
Coinbase and Blockchain alone are currently serving nearly 20 million wallet users. Apart from these regular day-to-day users, there exists many investors in regulated bitcoin exchange and trading platforms such as BitFlyer, Bitfinex and Bitstamp that hold bitcoin as an investment.
According to an infographic provided by a user of a bitcoin online community, the userbase of bitcoin is larger than many countries including Norway and Finland. The market cap of bitcoin is higher than the majority of fiat currencies in the world. Bitcoin has a higher market cap than the currencies of the following countries:
Mongolia, Bolivia, Paraguay, Papua New Guinea, Thailand, Laos, Sudan, Senegal, Nigeria and more. The full list of countries can be seen in the infographic shown below:
Importance of Scaling For Bitcoin Mainstream Adoption
Bitcoin, as noted in Satoshi Nakamoto’s original white paper, was designed and introduced to operate as a peer to peer electronic cash system. Due to its high fees and relatively long confirmation times however, since 2015, bitcoin has begun to operate as digital gold. In order for bitcoin to appeal to the masses, it needs to be able to handle small payments that are cheap, secure and fast. In other words, for bitcoin to surpass the value of reserve currencies and obtain a massive user base, it has to refer back to Nakamoto’s original vision of bitcoin.
Technologically, bitcoin is not there yet. The open source development community of bitcoin is working toward adding a settlement layer on top of bitcoin so that it can operate as both digital gold and settlement network. Technologies like Segwit, Lightning and Tumblebit are all designed to add that second layer of infrastructure to handle small payments for day-to-day users.
In a way, the comparison digital currencies such as bitcoin to fiat currencies or reserve currencies that are actively utilized by their users on a daily basis could be incoherent. However, if bitcoin is used as a digital cash system as Nakamoto outlined in 2009 in the future, then this comparison could be more relevant.