Money makes the world go round but as far as history is concerned, money, specifically, fiat money becomes obsolete over time. To give you an idea, the US dollar lost 98% of its value or buying power since the Federal Reserve was created in 1913. This is according to the Virginia Tea Party Patriots.
The relevance of discussing fiat money when talking about the future of digital currency is important because it is a huge factor why a new form of currency is making waves in the financial industry.
After all, why should people continue to rely on fiat money when history has proven time and again that it always ends up becoming irrelevant? A new type of currency in its infancy stage is cryptocurrency.
You’ve probably heard of it. Bitcoin has paved the way for cryptocurrency to explode in value but Bitcoin is not the only type of cryptocurrency. Now, cryptocurrency is becoming more and more used for means of different types of transactions.
According to BitDegree, this is the top 10 cryptocurrencies of 2019:
- Bitcoin (BTC)
- Ethereum (Ether)
- Ripple (XRP)
- Bitcoin Cash (BCH)
- Cardano (ADA)
- Litecoin (LTC)
- Stellar (XLM)
There are a few good reasons why cryptocurrency is doing well and one is because it has a very different nature compared to fiat money. Moreover, new trends are happening other than cryptocurrency being on the rise.
Here’s how the future of digital and cryptocurrency could look like.
The Cashless Society
Fiat or not, countries like Norway, Denmark and Sweden have started to adopt a cashless system. In fact, according to the official site of Sweden, 80% of Swedes no longer use cash or coins to make their transactions.
They either use cards or apps to create digital payments. By 2023, Sweden aims to be completely cashless. Another country on the march to becoming the first cashless country is China.
According to a study conducted by China Tech Insights, even in 2017, 92% of China’s top cities have been using apps like Alipay or WeChat for paying. China is currently the largest mobile payment market in the world and is an innovator in peer-to-peer payments.
Peer-to-peer payments allow people to pay each other through text. According to Forex Bonuses, China has had the highest growth in terms of cashless payments over the last 5 years.
Here are the benefits of going cashless:
- Easier to track money
- Budgeting can be more convenient
- Money is stored more securely
- Crime can be reduced
With a cashless system, you can check your money with ease using your debit or credit cards and apps. More than that, you can also see a history of your purchases. You can also better know how to budget your money with tools that can help aggregate data.
The safest place to store your money is in the bank. That’s where the money can be in a cashless society. With the cards and apps, you can set up security alerts and even cancel cards if you ever happen to lose them.
With physical money, if you lose them, they are lost forever. Without physical cash, crimes can be reduced because every transaction through digital payments is tracked. This discourages criminals as they can have no effective way to steal money.
Cryptocurrency has become so popular that it’s almost impossible for you not to have heard of it. Believe it or not, cryptocurrency before was known as means of payment for underground dealings such as purchasing of illegal drugs, weapons and other illegal items.
This was through an online black market. Cryptocurrency before and even now is still being used for criminal activities. However, since the boom of Bitcoin, the general perception of cryptocurrency has changed.
Now, the blockchain technology of cryptocurrency is being adopted by different industries for its potential and applications. Such industries are insurance, supply chain, transportation and media. That’s just to name a few.
A lot of companies are now even accepting cryptocurrencies as payment. Here’s a short list of companies we found from 99bitcoins that accept cryptocurrency:
- The Pirate Bay
Fiat money and cryptocurrency is quite different with how they work. In fact, they are the complete opposite. While fiat money is centralized, cryptocurrencies are decentralized.
This means that there is no governing power to restrict any level or form of transactions made with cryptocurrencies. Unlike banks that can freeze your accounts or any other authority that will have the final say, cryptocurrencies have no “gatekeepers”.
Here are the benefits of using cryptocurrencies as a mode of payment according to Finjan Cybersecurity:
- Peer-to-peer networking structure for transactions. This means that there’s no middle man.
- Special modes of transfer can be used. For example, making use of third-party approvals.
- More confidential transactions
- Transaction fees usually don’t apply
- Easier international trade
- Individual ownership
- Strong security
Can Crypto Replace Traditional Money?
According to Futurism, there are great advantages and dangerous disadvantages if cryptocurrency ever becomes the new money. For one, the value of cryptocurrencies can’t be manipulated as it is decentralized.
Another is that it can be used to distribute universal basic income. The use of cryptocurrencies also removes intermediaries. However, if the use of cryptocurrency becomes more common than traditional money, the value of traditional money will collapse.
The impact of this is that governments will no longer have control over their country’s currency because printing more money won’t surmount to anything. There would then need to be a change of infrastructures to accommodate cryptocurrency as the main currency.
Futurism mentioned that Fiat losing over to cryptocurrency can be a real prospect. According to Rick Falkvinge, founder of the Swedish Pirate Party, “Bitcoin will do to banks what email did to the postal industry.”
What are your thoughts about cryptocurrency becoming the new money?