How Crypto Is Replacing Fiat Transactions
Crypto projects have generated more than $20 billion in ICOs since the Bitcoin boom in 2017, demonstrating the huge potential for blockchain-based tokens in the corporate sector. But even after its rapid rise, crypto is often misunderstood. A lot of people still mistake cryptocurrencies with traditional financial transactions and believe that investing in it is exceedingly dangerous. It’s about time that we demystify crypto and set the record straight about its potential to replace fiat currency and revolutionize transactions.
Crypto vs. Fiat
But first, let’s demarcate digital assets such as crypto from fiat currency. In simple terms, fiat money is called fiat because it is supported and authorized by the government. And because crypto is presently not backed by any authority, it is not fiat.
Fiat is what the world has used since the 10th century to buy commodities, like products and services. On the other side of the coin, cryptocurrencies, a relatively new invention, are digital assets that are produced through a peer-to-peer, decentralized network called a blockchain, while tokens are platforms that operate within those blockchains.
The absence of brokers and banks, security, and transparency are what really sets digital currency apart from old fiat money. The revolutionary blockchain technology has the ability to fully monitor transactions and trace money all the way back to its inception. Best of all, it doesn’t care about government red tapes and regulations.
In general, the value of fiat is more steady than crypto. But because crypto is still relatively in its early stages, it may one day be as stable as fiat. As mentioned above, each has pros and downsides, but crypto–unlike fiat transactions which have been on the decline–has nowhere to go but up.
Formerly only known by a small group of left-field speculators, crypto is swiftly becoming a popular buzzword. Projections suggest that the international crypto would grow by more than threefold in a decade, reaching roughly $5 billion in value. Like an approaching asteroid from outer space, it’s just too big to ignore, and it’s about to hit the planet.
Every day, more individuals and corporations utilize tokens and crypto to transact. Investors are scrambling to get a piece of the Bitcoin and Ether cake. Artists and musicians minting their work into NFTs. And the trend is only growing.
What’s next?
While it is hard to predict what crypto will look like in 2023 and the coming years, there are critical factors that investors, big and small, are closely monitoring as the industry continues to evolve. Some of these details include global and mass-market adoption of digital money for basic transactions, crypto-based ETFs, and regulations in first-world countries like the US.
The protracted future of crypto will take form as these critical factors develop. And as states and blockchain engineers work daily on solving legal and technical issues surrounding digital assets, a clear image will eventually begin to take shape.
A crypto future
Here’s a dream scenario: Bureaucrats and politicians from around the world agree on a worldwide standard framework for crypto regulation. A viable system for investors, users, crypto startups, and traditional banks is created. What happens next is a total recalibration of the global financial system as we know it.
A plethora of monetary situations will arise. An economy would eventually adopt crypto to the point where it replaces the nation's fiat money. Its state would be required to accept digital assets as legal cash, and fiat money would be phased out.
This scenario might seem absurd at first, but the private sector is already laying the groundwork. Popular and publicly traded companies, including Subway, Burger King, KFC, and Wikipedia, are already accepting Bitcoin and other crypto as payment for their products and services. Meanwhile, some of the most powerful industrial heavyweights, such as IBM, Microsoft, Intel, and Goldman Sachs, are embracing blockchain technology.
Another possibility is a mix of digital assets and fiat cash, where both are recognized by the state, with consumers and corporations having the power to select whatever option they prefer. Then there’s a scenario where crypto is totally rejected by the government and the people. But this last scenario is improbable because blockchain innovations are moving society toward a system in which financial data cannot be manipulated or fabricated.
The specifics are still debatable, but for many experts and speculators, the discourse surrounding crypto making fiat extinct is now a matter of when, not if.