It's bitter but truth is truth. Cryptos can never replace fiats.
Greetings and a warm welcome my friends!
All that starts, also ends. This is the bitter truth and it also saves us.
(image source: pixabay.com)
Why am I saying so? I am not pessimist but, the way traditional market and political scenario of most of the countries manifesting, it seems that future may not be as bright as we had expected.
First of all governments don't like their competitors. Government prints and issues money. It takes responsibility for the value of the currency and guarantees that money issued by it won't lose its credibility in future. Government ensures that no other person will print his money and compete against the government issued money. On the other hand cryptos has no such guarantee. Anyone can issue his/her own cryptos and there is no control over its circulation and number. So, cryptos lack stability and their prices are highly volatile. They are decentralised which is a good thing in one hand as it can give a great freedom to the subjects of every nation. On the other hand it also destroys cryptos as too many cryptos are threat against the cryptos as too many make users doubtful and are vulnerable of fraud and corruption.
Governments all over the world have put some kinds of restriction on cryptos. In some countries they are allowed while many had restricted them. So, it also make life difficult. In India Government's central bank imposed ban on trading of cryptos in 2018. Now, government have put heavy taxes on trading on cryptos which is making life very difficult for crypto owners and users. One day government may put blanket ban of all types of cryptos and thus the investment people have will be doomed for once and all.
Cryptos are also subject to fraud and susceptible to manipulations and accidental loss. Recent crypto fraud committed by one of the top exchange FTX has revealed how vulnerable are the crypto assets and how one can steal everything from the investors. One can forgot password and addresses and thus may lose one's money forever.
Apart from the vulnerabilities of crypto world, there are many other issues. Trading fee is very high. Small portions of a crypto become dust. It takes too much energy to register a crypto transaction and crypto market and its trading is fully dependent on availability of electricity and internet connection. So, there is no security like physical money in it which is the merit of the fiats.
So, it seems to me that crypto market can never be a competitor of the traditional money known as fiats. There are too many hurdles in the way of cryptos and cryptos are just fine for fun and little transactions. But, they cannot replace fiats. So, it is wise not to invest your total savings on cryptos. Also, it is not good to invest your every penny on shares and keeping money in the banks. It is advisable to invest money on many things and many assets. Diversification of funds is the best.
Thank you for reading.
Thank you for your post and your thoughts, but as you know every thing has two sides:
Governments typically have a monopoly on the issuance of currency within their borders, and they take steps to ensure the stability and credibility of the currency they issue. They may also regulate the use of other forms of currency, such as cryptocurrencies, to prevent competition with their own fiat money. It is true that cryptocurrencies are decentralized and not issued or controlled by a central authority, which can make them more volatile and subject to fraud or other types of abuse. However, it is also worth noting that cryptocurrencies have the potential to offer certain benefits, such as increased speed and efficiency in financial transactions, as well as greater financial inclusion for those who may not have access to traditional financial services.
It is also true that both fiat money and cryptocurrencies can be subject to fraud and manipulation. With fiat money, there have been instances of counterfeiting, money laundering, and other types of financial crimes. Similarly, cryptocurrencies can be vulnerable to fraud, such as through phishing attacks, hacking, or other types of illicit activities. Additionally, cryptocurrencies are susceptible to accidental loss if the owner loses access to their private keys.
And regarding FIAT money it is possible for someone to lose their fiat money as a result of fraud or counterfeiting. For example, if someone receives counterfeit notes as payment for goods or services, they will not be able to use those notes as legitimate currency, and they will lose the value of the transaction. This type of fraud can occur with any type of fiat currency, including the US dollar, which is one of the most widely used and traded currencies in the world. It is important for individuals to be vigilant when accepting fiat money as payment, and to familiarize themselves with the security features of the currencies they use in order to detect counterfeits. Additionally, governments and law enforcement agencies work to combat counterfeiting and other forms of financial crime in order to protect the integrity and value of the currency.
To be clear counterfeiting has been a problem for as long as currency has existed, and governments and law enforcement agencies have been working to combat it for a similarly long period of time. The methods and technologies used to prevent counterfeiting have evolved over time, and today, most fiat currencies have a variety of security features designed to make counterfeiting difficult. Despite these efforts, counterfeiting does still occur, and it remains a problem that authorities continue to work to address.
It is difficult to completely eliminate counterfeiting, as there will always be those who try to produce and circulate fake currency for their own gain.
However, BITCOIN for instance should be able to solve this problem the rest of all the cryptos can´t and that´s what we actually see and learn ;)
Thank you so much dear for your valuable thoughts.
Government can overcome to these problem by simply issuing their own blockchain based currency. It has started in India and other countries are also doing it.
Oh, yes for sure you´re right with the CDBC´s they can overcome that, but one must not play the game like they like to, one can operate an aditional crypto (I prefer BTC) account /wallet and have still personal freedom to spent their wealth for what ever they get with BTC (or similar) in peer to peer transactions so the state does not have the chance to mess with it. That´s kind of a deal with another person in cash just with crypto -without greedy bankers, and information seeking state organizations.
Think of it its your money/crypto not the one from a government or a bank, so you need to have the right to choose what ever you like to do with it (maybe as long as it is legal) without getting headache because of worries that big brother Gov is seeking to have access to your financials.
They also won´t tell you what they do with their own money, right? So why you should do ?
Yes, you are right. However, they still have more chances than crypto lovers as they have authority.
Amazing comment buddy
Thank you for sharing your thoughts on the future of the cryptocurrency market. It is important to consider the challenges and limitations of cryptocurrencies, as well as the potential risks and benefits of investing in them. While it is true that cryptocurrencies can be highly volatile and subject to fraud and manipulation, it is also true that they have the potential to offer greater financial freedom and decentralization.
It is important to recognize that cryptocurrencies are still a relatively new and evolving technology, and it is not yet clear what the long-term future holds for them. Some experts believe that cryptocurrencies have the potential to become a major force in the global financial system, while others are more skeptical. Ultimately, the success or failure of cryptocurrencies will depend on how well they are able to address the challenges and limitations you have mentioned, as well as the extent to which they are able to gain widespread adoption and trust among users.
Regardless of the ultimate fate of cryptocurrencies, it is always wise to diversify one's investments and not to put all of one's savings into any single asset. As you have noted, this is especially true for relatively new and untested technologies like cryptocurrencies, which carry a higher level of risk.
Thank you so much dear @artist1111 for sharing your thoughts. I think government won't allow it to survive a they are afraid of it and cryptos are also subject to lots of vulnerabilities.
I agree with you on this @akdx. I'm one of the victim that lost hundreds of dollars on luna crash and FT token, and there's a further possibility of another crypto crash coming soon, but that won't mean one would not invest in crypto. Also, one needs to do that with caution as altcoins are volatile crypto asset subjected to fluctuations and liquidation at any stage. One just need to trade with caution and know that for now and next 10 years to come, crypto cannot finally take the place of fait digital or paper currency.
Sorry to hear about your loss. I think cryptos are valuable till we have hope. Hope is everything. Thank you for your comment.
Dear @akdx
I must admit - very interesting choice of topic.
Cryptos will surely never replace fiat. For one simple reason: future value expectations.
Holding fiat is not smart, so people are insentivise to spend it. Value slowly diminishing (by so called inflation) is a huge reason why money is "moving".
With crypto it's reverse. People do not want to use it to pay for any goods or services. They will trade it, hold it, invest in projects etc. But most of them will see it as an investment. Perhaps risky, but an investment either way.
That's a major reason why crypto will never replace fiat in my opinion.
And you also have a good point about goverments. They already accepted that crypto will be an asset and store of value, but they will not allow it to bo a form of payment.
And mostly, goverments will still require using fiat to pay debts, pay for oil, taxes etc. And that is enough to ensure that FIAT will continue to exist.
Solid read. Upvoted already :)
Piotr
Thank you so much dear friend @crypto.piotr.