Until it’s normal to pay for things like coffee or groceries with cryptocurrency, it has to be turned into fiat money for its value to be conventionally useful. Every American exchange of consequence allows for conversion between bitcoin and U.S. dollars, but bitcoin isn’t the only game in town.
Satoshi Nakamoto’s invention is surely the poster child of cryptocurrency at large, but a host of B- and C-List cryptocurrencies fill the same niche with less of a spotlight. This refers to altcoins, popular and unknown alike, including Litecoin, DogeCoin, Peercoin, FeatherCoin, Zetacoin, and so on. These currencies lack bitcoin’s name recognition though they solve the same problem, securely transmitting value from one person to another no matter where they are in the world.
So what do you do if you receive a payment in one of these alternative, unfamiliar currencies and want to pay the rent? You have to turn it into bitcoin first.
By comparison to its supporting actors, bitcoin has a certain hybrid quality with one foot in crypto abstraction and the other in real-world finance. The same currency that propped up notorious contraband marketplace Silk Road is now traded as a futures contract on the Chicago Board Options Exchange. This makes it into some kind of universal financial adapter; it’s as easy to turn most alternative cryptocurrencies into bitcoin as it is to turn bitcoin into dollars.
I recently received a crypto payment via Waves, a cryptocurrency that’s barely 2 years old and surely lacks bitcoin’s star power. In order to turn this money into something I can feed myself with, I needed to convert it first to bitcoin, then to USD. I used Binance to sell my Waves for the same amount of bitcoin (minus a negligible fee), then sent my bitcoin stash to Coinbase, which is connected to my bank account.
It took approximately 10 minutes to sell my Waves for bitcoin, then another 10 minutes to move the bitcoin to Coinbase. I received my bitcoin as a cash transfer to my bank account two days after initiating the order. It took five days for Coinbase’s confirmation test deposits to arrive, but that’s a different story.
Most alternative cryptocurrencies lack an immediate gateway to USD or other fiat by virtue of being less used and less liquid than bitcoin. Cryptocurrency at large isn’t as mainstream as cash or credit cards, but bitcoin is the stuff of Bloomberg headlines and breaking financial news.
For now, bitcoin is the interstate that most cryptocurrencies will travel on their way to becoming cash.