Will Cryptocurrencies destabilize the Money Market in the Future?

Hi Everybody,

This is a topic that will probably not be relevant for the coming years, but since the market capitalization of the cryptocurrencies is increasing explosively we might reach a future scenario that the cryptocurrencies will become a significant part of the total money market.

Currently the market capitalization of the cryptocurrencies is around 100 billion USD. Of course, this is a lot of money, but compared to the total money market this is still relatively a very low number. Depending on the way to calculate it the total money market can be estimated to be around 81 trillion USD. To put it in another way, the cryptocurrencies is around 0.1% of the total money market. This is not by far not enough to be a threat to the global money market.

However, I am wondering what will happen if the percentage will eventually rise to 5 %, 10% or even 20% ? Besides that the demand for cryptocurrencies will go sky high, this will also mean that the demand for traditional currencies will decrease rapidly. It will probably have serious consequences for the value and stability of a large number of traditional currencies. Also, if a (hardforked) bitcoin might ever reach a larger demand than the USD, it will have serious consequences on the way currencies are pegged to the USD.

Will we ever face a world in which Bitcoin or another cryptocurrency will be the anchor currency? Before we will ever reach that stage we might have to see by many national currencies depreciating like in the Republic of Weimar or Zimbabwe in 2008, combined with social unrest and turbulent financial markets. Thanks for reading my thoughts on this topic and feel free to share your views on this.

Brian