What if Cryptocurrency Permanently Replaces Fiat Money?
Cryptocurrency is on the rise, and it has provoked an array of reactions from the public. Reddit forums have been going insane, with people speculating what could happen if cryptocurrency became the new global currency. Others see this invention as a chance for them to build their very own money empire. This new technology will most likely cause massive financial changes in society. This article discusses what would happen if cryptocurrency permanently replaced Fiat money.
What is Cryptocurrency?
Cryptocurrencies are electronic currency or digital money. They have no physical form such as paper or metal coins and can’t be touched like hard currency. Cryptocurrency exchange is leveraged for buying goods and services electronically.
The best cryptocurrency list comprises Bitcoin, Litecoin, and Ethereum. Other cryptocurrencies include Dogecoin, Ripples, Monero, and NXT. Since cryptocurrencies are decentralized by nature, no authority regulates them – meaning you can turn over your entire fortune in a matter of seconds if you want to do so (not recommended).
What is Fiat money?
Modern economies use fiat money. The U.S. dollar is a fiat currency, as are the euro, the Great British pound, and any other national currency. What is fiat money? Well, it’s anything you can use to purchase valuable goods and services but has no intrinsic value when separated from these things (think about using gold to buy a loaf of bread). Our economy relies on this money because people are willing to accept it in exchange for real goods.
Will Cryptocurrency replace Fiat money?
It’s a question that’s been looking for some time now, but will cryptocurrency take over fiat currency? Let’s explore this perspective and see what we can find.
One big problem with Fiat money is that it is vulnerable to hyperinflation. One can’t redeem Fiat money for the face value of the currency. On many occasions throughout history, so much gold, silver, and other goods had been produced in attempts to combat inflation that it was impossible to redeem anything for the goods issued (For example: during The French Revolution, even antique furniture had become worthless).
In Europe, there have been many occasions where paper money became completely worthless because creditors refused to accept them as payment.
Cryptocurrency is the currency of the future, according to many optimists. Some believe that blockchain technologies will allow for a more dependable form of money than the one we use today. Crypto-enthusiasts believe it to be a more stable form of investment as well. But many think Bitcoin is nothing more than a bubble waiting to burst – and when it does, all our hard-earned money could be lost instantly.
The Bitcoin and other cryptocurrency markets continue to blossom exponentially. In five years, the total value of all cryptocurrencies has increased by 2,500-fold, from $5 billion in 2013 to over $250 billion. It’s easy to see why so many people are now investing in cryptocurrency to put their wealth and make money on the rise.
If you are looking for the best way to store your money, cryptocurrency may be a better option. This type of currency avoids centralization in that it is distributed among the users who trade with one another. Again, cryptocurrency does not involve banks or other financial institutions; it is stored and exchanged electronically through a process called “mining.”
The first thing to understand about mining is that cryptocurrency mining prevents double-spending by including exchanges in the mining process. These transactions are recorded in something called a blockchain, which provides extensive encryption to make sure they cannot be falsified or stolen.
What happens if cryptocurrency replaces Fiat money?
As demonstrated by a recent announcement from Superblocks, the cryptocurrency’s founder, who plans to switch all payments from fiat to cryptocurrency within the next few weeks, blockchains may be poised to permanently replace fiat money. The financial revolution that began in 2017 is now bearing fruit. While some people may not see this as a positive development for society and their wallets, it could ultimately offer humanity an opportunity for progress, unlike anything we have seen before.
But what are the implications of this transition? There are many possibilities — but one thing is certain; before it begins, there will be profound changes that come with it, whether they were meant to or not.
With the world as a whole slowly moving towards a digital cash currency, government-issued cryptocurrencies like Bitcoin have been promoted and given immense media attention. While these cryptocurrencies have seen their fair share of ups and downs in price, their value is still growing at an astonishing rate. However, the newfound popularity of cryptocurrency has come with many questions about how to adopt it as a national currency, given its present volatility.
The U.S. government has a task force for combating cyberterrorism, but most of its work goes towards securing databases, computers, and networks. They were not aware that cryptocurrencies could also be targeted by malicious actors who could take advantage of flaws in the code to steal digital currency from people all over the world.
It’s more than a question of “if,” as the cryptocurrency industry has already begun to challenge traditional currencies.
Recently, Dan Morehead, CEO of Pantera Capital Management – an investment fund focused exclusively on Bitcoin – spoke at Yahoo Finance All Markets Summit.
He said: “Bitcoin is going to be worth a tiny fraction of what it is now if we’re headed out 10 years from now… We’ll see bitcoin go down in history as the single greatest bubble of all time.” He also said that he “wouldn’t bet against” bitcoin but that he would not go out and buy it.
The Key Takeaways
It is hard to say if cryptocurrency will wholly replace fiat money or not. Though both forms of currency share some similarities, like being able to be traded for goods and services, cryptocurrency is a much more volatile form of currency than fiat money.
However, it may one day become a popular form of investment and speculation for those who are not dissuaded by the volatility. Despite its flaws, cryptocurrency has the potential to serve as an alternative when fiat currencies lose their value due to hyperinflation or economic collapse.
End of the day, it’s in the hands of the government and the people whether to let digital currencies take over Fiat money.