Could cryptocurrency overtake the other types of currency?
When working with digital currencies, many people think about the prospect of such assets. There is still an opinion that cryptocurrencies are a temporary phenomenon, a financial pyramid that will collapse, along with all investments. But today we will analyze more reasonable forecasts. Next, we will talk about the potential of cryptocurrencies as the only monetary instrument on the planet. Can digital coins become a robust alternative to the dollar, euro or RMB? Let’s understand, highlighting all the ambiguous details.
What is the problem of fiat currencies?
The usual monetary assets, such as the above assets, are fiat coins. Their key difference is the presence of a specific physical form, which is expressed in the form of a paper bill or an iron coin. Based on this, we can immediately highlight the first minus of fiat coins – impracticality. You must have come across the fact that the bill may break, and the coin roll into the drain. And now, the fare is already not enough. To change the spoiled money, you have to go to the bank, wait and only then go on business. Agree, in the era of digital technology this is not the most pleasant nuance.
Directly from the previous drawback, the following problems arise. Due to the presence of a specific form, money can be faked. We regularly hear the news that the police detained counterfeiters who had been making counterfeit bills for several years. Some swindlers have developed their own criminal skills so much that they make notes that are almost impossible to distinguish from the original. Even employees of the relevant structures can not always find a fake, which is to say about ordinary citizens. Residents may be faced with fake banknotes and then be accountable to the law. It is dangerous and uncomfortable.
Due to the physical interpretation of currencies, large transactions are becoming a real problem. The collection is forced to transport bags of money, substituting under the blow of bait hunters. This shortcoming can cost human lives, and all because paper money becomes obsolete on a daily basis. But there is a solution today – these are cryptocurrencies that exist in the digital space, which cannot be faked, and thefts are easily stopped. Everyone can send even the largest amount in the crypt simply by pressing a few buttons in the mobile application.
Could cryptocurrency become the world currency? Is cryptocurrency the currency of the future?
It should be understood that the complete replacement of a centuries-old monetary instrument, in the face of fiat currencies, is a very long process. Therefore, it is foolish to expect dramatic changes in the economy in the next 5 years. The development of a digital version of the euro is already underway, but all tests, checks and integration of this asset will take at least 10 years. This time is needed to rebuild state apparatuses, to draw up a simple scheme of working with crypto, which will be understandable even to old people. You will also need to completely rebuild the banking system, equip it with advanced equipment and put an end to bureaucracy. All this takes years.
But cryptocurrencies are the future. Yes, maybe fiat currencies will not go entirely out of our lives. It is believed that over time, the dollar will take the place of gold and become an asset that they repel in compiling global prices. But even in this case, cryptocurrencies will help. So-called stablecoins already exist. They are designed in such a way as to attach to the currency (most often to the dollar) and change with it. Probably stablecoins will come first. These are the same cryptocurrencies, with security, speed and ease of operation, just with different pricing. They will become a necessary step towards the transition to completely new digital tools.
What cryptocurrency will be most useful as currency?
Having read up to this point, you are probably wondering – what kind of cryptocurrency will become global? Indeed, at the moment about 5000 digital assets are registered, but this is only an approximate number since coins appear daily. Yes, some of the digital assets are a common copy of popular solutions, but most of them consist of really reliable and interesting currencies. Most likely, the most popular coins at the moment will receive global significance. Bitcoin may be the starting point in the development of Blockchain in the global economy. The coin is gradually becoming obsolete, but it is still the largest market instrument, they will be listened to at first.
Most likely the supremacy of Ethereum. The ambitious platform is constantly growing, adding more and more new solutions to the system. Thus, ETH could very well become a global currency. Thanks to a flexible Blockchain and a convenient smart contract, ordinary citizens can become entrepreneurs by developing their own application based on Ethereum. Ripple (XRP) also deserves special attention. A popular currency is literally created for use at the state level.
Of the stablecoins, Tether (USDT) can be distinguished, which we wrote about repeatedly on our website. However, it is possible that governments will develop their own cryptocurrencies. This option cannot be ruled out since the use of unique personal monetary solutions will allow countries to work better with the economy. We can only wait and follow all the news of the crypto industry together. Good luck!