At the beginning of the cryptocurrency boom, many analysts argued about whether cryptocurrency was a currency and could replace money. Several years have passed, Bitcoin is still leading the way, and the industry’s rapid turnover has some analysts predicting that there could be even more significant changes ahead. What kind of changes? Cryptocurrency replaces cash. This is the conclusion reached by Deutsche Bank experts in their study “Imagine 2030”.
Hi everyone, this is Alex, blockchain guru and cryptocurrency researcher. Let’s go through this exciting issue together, looking at all the positives and negatives of replacing cash with cryptocurrency.
Prerequisites of Replacing Cash with Cryptocurrency
Right now, cryptocurrency is an alternative to traditional money but not a replacement for it. But that could change over the next decade: the only thing the industry needs to do is overcome existing regulatory barriers. Analysts believe that if governments support cryptocurrency and consumers agree to use it, the rate of its adoption will be determined by the quality of its spread among users.
If current trends continue, about 200 million people will be using cryptocurrency by 2030, which is four times more than at present. Its main advantages facilitate the mass adoption of cryptocurrency:
- transaction processing speed;
- minimal commissions for transactions;
- easy storage;
- compatibility with modern digital systems;
- cryptocurrency confidentiality.
Another process that is driving demand for alternative measures of value is inflation. Traditional money may not survive the situation in which governments will find themselves, sooner or later, trying to balance higher yields with record levels of debt.
Of course, all this will happen on the condition that financial regulators will facilitate the process of crypto’s acceptance. Their approval will significantly raise the reputation of digital assets in the eyes of big investors, who will give an additional boost with their capital.
Positive Aspects of Replacing Cash With Cryptocurrency
To have a complete picture of the future of the world where cryptocurrency has replaced cash, let’s first look at the benefits.
- Cryptocurrencies could better support the concept of universal basic income than fiat money. Some programs have already experimented with using cryptocurrencies as a means of distributing universal basic income.
- Cryptocurrencies can help get rid of intermediaries in day-to-day transactions. This can lower costs for businesses and benefit consumers.
- Cryptocurrencies could improve cross-border interbank payments and settlements. They lag behind domestic advances and are still based on the correspondent banking model, so pilot projects were launched to introduce blockchain into the banking system.
The most promising pilot and the final project was MADRE, initiated by the Bank of France in 2016. The bank used a blockchain technology solution to improve a relatively lengthy procedure in which multiple banks had to maintain constant contact.
Possible Danger if Cryptocurrency Replaces Cash
Of course, in addition to the significant pluses, several severe problems and concerns are associated with such a scenario.
- If cryptocurrencies surpass cash in use, traditional currencies will lose their value without any legal recourse.
- If cryptocurrencies are fully absorbed, new infrastructure will need to be created to allow the world to adapt. The transition will inevitably be difficult because cash could become incompatible reasonably quickly, causing some people to lose their assets. Established financial institutions will likely have to struggle to change the way they operate.
- Governments will suffer. Government control of significant currencies is key to regulating the economy and many other aspects. Cryptocurrency, on the other hand, works with much less government control.
What is the Likelihood of Replacing Cash with Cryptocurrency
The world of cryptocurrency is volatile; changes happen quickly, so with much speculation that the cryptocurrency industry is a bubble destined to burst, predictions that cryptocurrency will replace cash are wildly exaggerated.
It is important to note that while many companies offered to accept cryptocurrency at the beginning of the crypto frenzy, over time, the list of such companies began to shrink, returning to skepticism about using cryptocurrency as a medium of exchange. According to experts, cash will dominate the global financial system for a long time to come; cryptocurrencies are unlikely to dominate society, surpassing the dollar and other traditional currencies.
However, they also gave an optimistic prediction about cryptocurrencies: the speed of their spreading will be enormous, and the spheres where they are used will increase. The share of non-cash payments is gradually increasing. Researchers concluded that in the next five years, two-fifths of purchases in U.S. stores would be made through mobile payments. It is almost four times more than the current level of the indicator.
What conclusions can we draw based on all of the above? The crypto market will go through a series of fundamental changes in the next decade, but even thanks to them, BTC will not rid the world of traditional money. And even the popularization of non-cash payments does not change the situation so far.
At Artex Global, we follow with great interest everything that is happening in the world of blockchain and the development of the cryptocurrency markets. If you want to stay updated on cryptocurrency news or learn a little more, we suggest reading our other articles on the topic, for example, about ICO or about Kraken cryptocurrency exchange.
I have been studying cryptocurrency for over 5 years. I have accounts in every exchange and I test everything on myself.
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