#6 – Cryptocurrencies Exist Only To Virtual Currency Radicals That Go Out Of Their Way To Avoid Government-Backed Fiat Currency
This post is part of a larger series of post titled
The Top 10 Cryptocurrency & Bitcoin Misconceptions | Misunderstandings | Concerns | Perceptions | Criticisms in 2017
The dysfunction of the worlds existing payment system is the most compelling reason to explore alternative currency models such as cryptocurrencies. Many virtual currency advocates support Bitcoin and other cryptocurrencies because they separate currency from governments - a concept that has had support from at least one serious economist. Friedrich Hayek, who won the Nobel Prize for Economics in 1974, proposed that individual firms issue currencies not backed by any production or consumer good, which is essentially what Bitcoin is, except updated for the 21st century. Others go even further and hope that the emergence of new ways to exchange and store value will lead to new social constructs, new ways for human communities to exist without any form of government whatsoever.
Another case cryptocurrency advocates cite is the never-ending compromise of credit cards. Simply put, the current global financial payments system simply has not kept up with the sophisticated methods individuals and groups can use to hack into existing financial structures.
This argument undoubtedly held the #1 spot for a long time, but with the broad application of blockchain technology beyond the digital currencies application, and a better general understanding from the public, this certainly isn’t a strong argument anymore. It may be true, but at this point, it’s not the only reason people are interested in cryptocurrencies anymore.
Traversing the Cryptosphere,
Kryptonaut
Another fine post in your series.
The Hayek quote is particularly interesting. In light of his observation, we can see that the use of a certain gov't-issued fiat currency in any given area is simply a convention. Any country's currency is used in that country because it's convenient and reliable – until it's not, that is. For instance, Cambodia, Panama, and Zimbabwe use the US dollar as their prime currency, for various reasons.
If one cryptocurrency or many cryptos can provide more convenience and reliability, then it's quite likely that the cryptos can easily replace fiat. In fact, isn't that what has been happening over the past few years?
Onwards, and Full Steem Ahead.