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It seems hard to believe that something we have grown up using, as banal as anything else, something we take for granted on a regular basis, may be eradicated from our lives. In fact, had you asked an economist ten years ago about his opinion on this matter, chances are, they’d think you had a screw loose.
But when those same economists are lobbying in favour of cryptocurrency today, you’d think that there’s something amiss. To be frank, we can’t be certain about the future. The twenty-first century has been quite unequivocal in assuring us that all conjecture, if not backed up with hard proof, is doomed to fail. Consider Bitcoin if you need an example of what I’m talking about. Who would have guessed that we would soon be using Bitcoin, a virtual currency, that would eventually overtake the U.S. dollar in value; who would have guessed that it would soon develop a computing power greater than a technology giant like Google? Nobody can foretell the future, but that’s exactly what we venture to do here.
In this article we will go through evidence that cryptocurrencies are growing at a rate that may suggest they replace fiat currency one day, and evidence they may not.
Argument: Cryptocurrency Will Replace Fiat Currency
What better argument in favour of this position than to compare the value of the dollar versus the Bitcoin? As of August 1, the value of Bitcoin stands of 7,544 United States Dollars. Within 8 years it rose to become the world’s sixth most powerful currency by circulation, according to Investopedia in December 2017.It was the world’s strongest currency in 2015, according to a Medium article.
Ethereum, the second most powerful cryptocurrency in the crypto-world (cryptopia?) is also doing pretty well. As of August 2018, one Ether (ETH) was worth 419 United States Dollars. It has been compared to Bitcoin, and some claim it’s giving Bitcoin a run for its money, but no matter, it’s going strong.
Even other Altcoins, while nowhere near the success of Bitcoin and Ethereum, are still going very strong. Take Ripple and Litecoin, which are going very strongly, despite their nascent status. According to Business Insider, both are examples of some of the best altcoins on the market.
Considering that the value of cryptocurrency in circulation has already exceeded 100 billion dollars, and that cryptocurrencies are expected to be worth over a trillion dollars in 2020, there is a pretty strong basis for the argument that crypto is here to stay. Looking at the numbers, the claim that money may be replaced by virtual coins doesn’t seem so ludicrous anymore. And then, if you stop and think about Bitcoin and the train of different cryptocurrencies that it spawned, there is no denying the fact that they have remarkable progress in a very short time.
Consider the fact that the European nation of Estonia actually planned to launch its own national cryptocurrency called “Estcoin”. Wait, doesn’t that mean that cryptocurrency can actually be used in the place of fiat currency as legal tender? Well, the government of Estonia certainly thought so, and there was a lot of support for it too, until the European Union shut the idea down.
So, it should be apparent by now that cryptocurrency can be used as legal tender, but should it?
Argument: Fiat Currency Should Not Be Replaced
In every age of the evolution of humanity, there has always been a physical material, a real item, or even a token symbolic of something else that we have traded against. Against which some of our greatest civilizations were built and paid, by which we have reached the pinnacle if success and technology that we take for granted today. These accomplishments were made because of two reasons:
- Humans have coexisted with one another and have built international cooperation built on the exchange of tokens that we call fiat currency.
- Humans have decided by trial and error that currency should be light enough to easily in large quantities, but also not so advanced as to be unusable everywhere.
While cryptocurrency can definitely be used as a valid currency, it does not have the same physical usage. Imagine your phone breaks, and you’re stranded in a foreign country. What can you do then? If you can’t access a device you possess, you are basically broke. It doesn’t matter if you’re a beggar or a billionaire; if you can’t prove that you have any money, you are the former. Whereas with fiat currency, you don’t have to depend on anything to use it. Buying is a simple transaction, that can be done easily by anyone. An entrepreneur in a first world country can use the same bill that a middle-class citizen can, and for the average person in third world countries, cryptocurrencies are too esoteric to gain the same worldwide acceptance that the dollar has in the last half century.
Moreover, cryptocurrencies all have the same core problem: their prices are just about as stable as London Bridge in the nursery rhyme. Bitcoin itself has lost about five thousand dollars’ values in one month before. Even between July and August, the price fell by around two hundred dollars. This kind of inconsistent variation cannot be viable in any sense to a country. Imagine the effects on the lower class. One morning, they would wake to find their total life savings fell to half of their previous value. Stricken, they might empty their savings to pay bills, only to find their savings were worth ten times their original value the next day. While the rich got richer, because they could afford to wait for a better opportunity, the poor ended up poorer.
Of course, these issues have reached the ears of high ranking officials, and they are just about to roll out their solutions, foremost of which should be Amon Tech, with their A.I. and plastic payment card, the Amon card. While the solutions are yet to arrive, there is no debate that these issues will be solved, just as the double spending problem issue was solved.
At the current stage, cryptocurrency has a few issues that need to be solved before we can actually consider them as a replacement for fiat currency. But the day is fast approaching when even the proud dollar will bend to the victorious Bitcoin, and on that day, remember that all things must come to an end.