Many strategists from the cryptocurrency community have spent years of researches and have come up with a prediction that cryptocurrencies will disrupt the use of fiat currencies in the coming future. However, this prediction is combated by other strategists who have nulled this prediction by giving their own views.
Deutsche Bank, in one of its reports (Imagine 2030), has predicted that things will change by 2030 and digital currencies will be replacing fiat money. According to Jim Reid, the Global Head of Fundamental Credit, Strategy and Thematic Research at Deutsche Bank,
“We predict the end of plastic credit cards, the end of high-profit margins, and the end of low corporate tax rates.”
According to the predictions, there are many external forces like a higher rate of inflations and existing policy decisions, that are trying to unravel fiat currencies while fueling the demand for cryptocurrencies.
Some of the factors that go in favor of the statement that cryptocurrencies will replace Fiat currencies are discussed hereunder.
Unlike fiat currencies, cryptocurrencies have the advantage of convenience; it is available just with a click of a button. Anyone from any part of the world can transact with cryptocurrencies in just a few seconds.
With cryptocurrencies, the users do not need to wait for the long processing time, as in the case of the existing electronic payment and settlement systems.
Lower Transaction Fees
Cryptocurrencies have emerged as the most preferred means of payments due to the lower transaction fees. Transferring money through banks involves a long processing time and extensive bank charges that the modern generation is unwilling to pay. Therefore, they favor digital currencies.
The most beneficial part of using cryptocurrencies is that the identity of the users need not be disclosed while transacting. One can easily use a crypto wallet and transact with cryptocurrencies for crypto games without revealing personal details.
Not Under Control of Any Central Banks
Unlike fiat currencies that are backed by the central bank, cryptocurrencies are decentralized and not under the control of any central banks. Therefore, policies regarding crypto assets can be changed whenever required without letting any central authority to know and approve.
Factors that some strategists put forward in favor of fiat money are discussed hereunder.
Unlike other forms of currencies, fiat currencies are relatively stable and therefore, the government and regulatory bodies can easily navigate the economy against a stubborn recession or inflation. Cryptocurrencies, on the other hand, are highly volatile in nature, and therefore it affects the value of the coin.
Therefore, by tossing the factors both for and against cryptocurrencies, we see that the factors supporting fiat money are very few in front of the factors that support cryptocurrencies. Strategists who supported cryptocurrencies were able to put forward many positive sides of cryptocurrencies that give a hint of the prediction that crypto may disrupt all other means of payments, including fiat currencies.
With so many boons to society and the economy, cryptocurrencies should be given a legitimate status in the eyes of the regulators and governments. If cryptocurrencies are given this governmental support, then it won’t be long before cryptocurrencies capture the mainstream. In fact, most of the market experts view this to be advantageous to the entire business ecosystem that includes both merchants and consumers, who can then use a digital means of payment mechanism. This will bring in price stability, which will, in turn, help in attracting the interest of the stakeholders.