Can top Cryptocurrencies take over fiat currencies?
It’s been more than a decade since the launch of Bitcoin. In the start, the cryptocurrency was not so welcomed for various reasons. But as the market and general community understood the importance and developments were made, the use of cryptocurrencies became traditional.
Cryptocurrencies are so popular these days that there have been discussions if these currencies and digital cash system could take over fiat or traditional currencies.
Although it would be too early to form an opinion, in this article, we will discuss different views that could prove vital for the future of cryptocurrencies.
Traditional Currencies vs. Cryptocurrencies
Fiat/ Traditional money: Traditional currencies are a standard mode of payment that is used in almost all around the world. Dollar or Euros are some of the examples of traditional currencies.
Cryptocurrencies: Cryptocurrencies are secure, fast, and decentralized digital cash assets that could be transferred from one person to another.
A Brief Comparison
We could differentiate cryptocurrencies with fiat currencies based on the following points:
- Fiat currencies exist in physical form; on the other hand, cryptocurrencies exist in the digital form.
- The state controls fiat currencies, or central authorities whereas cryptocurrencies (as of writing this) are decentralized, and there is no central authority.
- One of the significant differences among these two is how the value of a currency is determined. The value of fiat currencies is controlled by factors like the overall economy and the decisions made at upper levels. The value of cryptocurrencies, on the other hand, is what people perceive and the concept of supply and demand.
Advantages of Crypto over Cash
- Anonymity and security are some of the main advantages of crypto over cash.
- Cryptocurrencies are easy to use globally as compared to traditional currencies.
- The overall transaction costs are less in most cryptos, as there is no central authority involved.
Advantages of Cash over Crypto
- Using cash is more reliable and trustable as governments own them, and banks could be responsible in case of any issue.
- Cash is less volatile, as the value is unlikely to change drastically.
- Using cash is common and legal all over the world, whereas cryptos are still banned in some regions.
What to Expect?
Now that we have discussed traditional currencies and cryptocurrencies in detail, we could come to our initial question that cryptocurrencies will be strong enough to take over cash?
- The fact that the world is moving towards digitalization and the world is turning into a global village, the ever-increasing demand for currency that could be used by everyone from everywhere will keep on increasing. Cryptocurrencies could prove to be the solution to this need as cryptos are global and uniform for everyone.
- On the other hand, the fact that fiat currencies are backed up by governments and they won’t be too comfortable for adopting a currency in which there is no say of central authorities. This has also been a hindrance in making cryptos global currency as of now.
So, in conclusion, we could some up our discussion by observing that it would be too early to form any judgment, but it is likely that both cryptocurrencies and traditional currencies will play their vital role wherever required.
Do you think that cryptocurrencies could ever replace cash? Let us know in the comments.