Will Cryptocurrencies Ever Take Over?
When cryptocurrencies were introduced to the market, the leader was unquestionably Bitcoin. And up until last year, it remained at the forefront of the market.
However, within just a few weeks, a number of other cryptocurrencies rushed in and started to catch it up – including Ripple and Ethereum.
So while Bitcoin still leads, these recent and rapid changes have left some experts debating whether these virtual currencies are indeed ‘currencies’. On the other hand, some analysts are predicting even bigger and bolder changes for the future – including taking over cash entirely.
What Are the Advantages of a Future with Cryptocurrency at the Forefront?
There have been many reports that have taken a look at some of the potential outcomes of a cryptocurrency future if cryptocurrencies were to take over fiat currencies at some stage.
One key consideration is the fact that the manipulation of cryptocurrencies cannot happen as easily as it can with fiat currency. This is primarily due to their unregulated and decentralised status.
Furthermore, compared to fiat currency, cryptocurrencies have the potential to better support the ‘universal basic income’ concept. In fact, there has already been some experimentation with programs that use cryptocurrencies to distribute a universal basic income.
Finally, these types of payments could help get rid of middlemen in day-to-day transactions – hence why a range of industries now accept cryptocurrencies as a form of payment – e.g. technology stores, travel agents, online casinos and financial services. This benefits both the company and customer.
What Potential Downsides Are There to Cryptocurrencies?
It goes without saying that there are a number of concerns and challenges associated with this potential outcome.
Firstly, there’s the issue that all traditional currencies would lose their value if cryptocurrencies outpaced them – and there wouldn’t be any means of recourse. A new worldwide infrastructure would also need implementing so everything and everyone could adapt to this new currency.
During the transition from fiat currency to cryptocurrency it’s highly likely there would be difficulties because cash wouldn’t be compatible, which could result in some people losing their assets. Financial institutions would have to quickly adapt to survive this change, too.
Other institutions that would suffer are governments because they’d be far less involved in the regulation of this currency – if at all. For example, they’d no longer be able to work out how much currency they’d need to print to respond to internal and external pressures. The generation of new tokens or coins would rely on the individual operator behind the cryptocurrency.
For many, cryptocurrencies will play a role in the future of our digital and financial world – just what its influence will be remains to be seen. And no matter how sceptical some may be about the cryptocurrency industry, it’s also very difficult to predict what’s ahead – especially when it comes to anything crypto-related. With things often happening quickly (even overnight), getting to grips with what’s going to happen in the future is difficult.
Therefore, no matter how investors feel about transferring from cash to cryptocurrencies, the decision is out of everyone’s hands.