Is Cryptocurrency the Future of Mainstream Finance?
Younger investors, particularly Gen Z, are shifting the focus of their portfolios to cryptos. Right now, cryptos are traded and bet on primarily for their value in fiat currency like the all-American dollar. Can cryptos potentially replace the dollar, yuan, or pound as government-backed currency? If so, will they still be worth the hype?
Understanding Fiat Currency
Fiat is a Latin word meaning “Let it be done.” Before exploring whether cryptos can replace fiat currency, we need to understand what fiat currency is.
Fiat currency, or traditional currency, is issued by the government which issues the currency, and is not backed by gold. Fiat currency is instead backed by:
- Decree of the government and promise of value
- The public’s trust in the government and central banks
- The global perception of the country
Fiat currency replaced the gold standard as the preferred financial trade system in some countries as early as the ’30s. Fiat currency is basically betting on your country’s money keeping the trust of its people, and therefore, its value. I’d rather place my bets at casino NetBet knowing I had a reasonable chance of winning, whereas with fiat currency, well, not so much.
Why Has Everyone Gone Crypto-Crazy?
Cryptocurrency offers certain benefits that traditional money has not been able to provide. Young investors see the traditional currency as a system created for a world that no longer exists. The 21st century demands more transparency, accessibility, and ease of exchange in its currency.
Here are a few of the many benefits of using cryptocurrency.
Cryptocurrency guarantees anonymity because of the different cryptographic techniques it is powered by. These techniques ensure that data is protected and that information doesn’t fall into the wrong hands.
Transactions carried out using cryptocurrency cannot be changed or forged. Blockchain technology enables transactions to be tracked for verification. But, the ever-evolving system still prioritizes the privacy of its users. Cryptocurrency is not controlled, owned, or operated by any one government, institution, or individual. The system operates at peak security and efficiency without human intervention.
Access and efficiency
We live in a world where access to any actual wealth or financial security is limited, if not impossible, without identification. Cryptocurrency changes that reality for many people worldwide.
The most crucial benefit of cryptocurrency is that it is a decentralized system. No world government can control the flow or availability of cryptocurrency. In recent world news, countries banned from international aid found their saving grace in cryptos.
Cryptocurrency allows people without financial records to tap into a safer, faster, and cheaper financial system.
Why Isn’t Everyone Using Cryptocurrency Yet?
There is one main reason why cryptocurrency isn’t the preferred method of financial transaction; Trust. People view cryptocurrency as a risky investment because it is not backed by a physical asset like gold. The majority of the global population doesn’t realize that the currency in use today is not equal to a country’s reserve of gold and thus is not backed by it either.
Cryptocurrency has the potential to shake up the global financial system in a big way. There is no way for one person, government, or institution to control the system that powers cryptocurrency. Cryptos can’t be stolen unless managed by a sketchy third party. Cryptocurrency is the near future of safe, secure, fast, and completely transparent personal finance. Maybe it’s the shakeup the world needs to get real wealth back into the hands of the people.