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Jeremy

Do you think fiat currencies will be replaced by crypto?

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Hi there,
The world started by frowning upon cryptocurrencies. However, as we speak, it is now legal in almost all countries. In light of this, do you think crypto will replace fiat currencies in the future?

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Hi Jeremy, the growing popularity of cryptos means that most governments can no longer ignore them. However, we are a long way off from seeing cryptos completely replace fiat currencies as the governments have a monopoly over such currencies.

What we are likely to see is governments issuing digital versions of their fiat currencies such as a digital dollar. Many countries are already working on such initiatives with several nations having issued digital versions of their currencies; these countries include Venezuela, the Marshall Islands, Tunisia and Senegal.

Other countries such as China and the US are testing the viability of a digital version of their currencies and its only a matter of time before such currencies are issued. You should keep in mind that digital currencies developed by Central Banks will be very different from other cryptos as they are modeled after fiat currencies.

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Hi Jeremy,

Since the last decade, several digital currencies have come up, making the fate of FIAT currencies uncertain. While fiat currencies are still dominant in the real world, cryptocurrencies are picking up pace in the traditional business world, showing signs that perhaps, they might take over someday. But will they?

Unlike FIAT currencies, cryptocurrency is decentralized and unregulated, hence not easy to manipulate or regulate. With cryptocurrency, there’s no need for intermediaries in everyday transactions, so businesses and consumers can cut huge costs. While using a complex code system to protect the transfer of sensitive data, digital currencies are more secure than traditional notes that are easy to counterfeit.

While the world would surely benefit from a cryptocurrency-dominant era, government acceptance, global adoption, massive improvement in cybersecurity technology, among other things, will have to happen before cryptocurrency can be adopted.

If countries like China, who have already shown interest in using cryptocurrency in the future, become successful in replacing FIAT currencies, perhaps it might encourage other nations to take a similar step. Even so, it will be difficult to convince governments to abandon the traditional currencies that they can fully control.

Therefore, for now, FIAT currencies will remain dominant, at least until when the world would be fully sold out on an alternative.

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I saw there have been a couple of answers but I just wanted to add to Simons answer here. I agree with what he is saying, cryptos will come in but they will be issued by central banks and controlled by central banks. Essentially meaning that rather then them being digital currencies in the sense of deregulation and anonymity they are just the same as before but with no cash (which defeats the point). 

I also think they will come in as a way to reduce the dollars valuation and therefore offer a way for countries with extreme amounts of dollar denominated debt to still be able to repay. 

just wanted to add my 2 cents in!

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Hi,

Although some businesses accept crypto payments, not many would choose this currency over fiat money. Not to rule out the possibility of a total crypto takeover. In its past Imagine 2030 statement, industry giant Deutsche Bank highlights the need for anonymity and dematerialized monetary systems as some of the reasons behind digital currency adoption.
Major Hurdles
Mainstream acceptance doesn’t come without challenges. For starters, volatility undermines the role of cryptocurrency as a mode of exchange. Though fiat money is also affected by inflation, it takes a while for market participants to feel the effects. Similarly, a virtual coin may be unreliable for storing value if its blockchain rules are compromised.
Likely Contestants
Owing to the flooded digital market, only a few coins stand the chance of large-scale adoption. Bitcoin, for instance, has a huge potential thanks to its ATMs and integration into the payment systems of major corporations like Microsoft and Playboy. Altcoins like Ethereum and Litecoin also have potential considering their popularity and early entrance into the crypto scene.

 

 

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Hi Jeremy, thanks for the question.

This is one of the most popular questions right now, with many people trying to come up with their own opinion. I believe that it’s a matter of WHEN, not IF cryptocurrencies will replace traditional money. Not just me, but the Pentagon is apparently sharing the same opinion. 

While protests are being held in the United States, the online news publication “The Intercept” unveiled a document which states that the Pentagon developed a war game in 2018 that resembles current events. 

Accordingly, the Pentagon developed a war game named “Joint Land, Air and Sea Strategic Special Program (JLASS)”. One of the plots in the game involves Generation Z starting a rebellion, called the “Zbellion”, funded by Bitcoin. The JLASS is “intended to reflect a plausible depiction of major trends and influences in the world regions,” as described in over 200 pages of documents. 

In the game, the players are instructed to go on the dark web and obtain advanced malware to steal funds from corporations, non-profit and political organizations as well as financial institutions that support “the establishment”. 

According to the document, “Zbellion uses software programs to route any proceeds into laundering programs that ultimately convert national currencies into Bitcoin” and makes "small, below the threshold donations" to "worthy recipients", such as players who carry out the attacks or people who need money.

Even though the game was developed in 2018, the JLASS backstory could be compared to the current events that drive some US citizens towards cryptocurrency. 

Two years ago, when the game was created, was the time when the initial coin offerings were thriving and there were no indications that society and public authorities would employ the technology.

The Pentagon issued a report in July last year, describing a new cybersecurity shield that utilizes blockchain fight against cyberattacks. 

Therefore, the US officials are obviously preparing for a scenario in the future when the crypto assets are more popular and adopted globally. 
 

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Hello, thanks for asking the question.

In December 2019, Deutsche Bank AG conducted research on this matter. According to the bank, by 2030, we will see a rise in demand for cryptocurrencies which will eventually replace cash.

In the research report named “Imagine 2030”, managing director and strategist at Deutsche Bank, Jim Reid, talked about the issues that fiat currencies have been experiencing over the recent years, especially after the birth of digital currencies. He pointed out that the rising demand for dematerialized payment system could drive people away from traditional currencies. 

However, in order to become mainstream, cryptocurrencies need to overcome certain obstacles. First and foremost, digital assets need to get a proper approval from global authorities and regulators in order to gain price stability and global significance in the payment system. Reid noted that collaboration with major stakeholders such as mobile apps and card issuers could help overcome this hurdle. 

He also said that once digital assets become mainstream, we can expect new challenges to emerge. Some of the major challenges the crypto-based financial systems will face include dependence on electricity, cyberattacks as well as digital wars. 

 “As that occurs, the line between cryptocurrencies, financial institutions, and public and private sectors may become blurred,” he wrote.

Meanwhile, global authorities have been discussing the need to build national digital currencies. Last year, Bank of Japan Governor Haruhiko Kuroda noted that there’s still no public demand for developing a national digital currency in the country. Kuroda pointed out that the Bank of Japan has been doing technical and legal research on this subject, however, the demand for cash payments has been increasing. 

The central bank of France, on the other hand, said it plans out to roll out a Central Bank Digital Currency for financial institutions in 2020.
 

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Hi Ilija, thanks for asking the question.

Back in April during the coronavirus lockdown, Malaysia’s Securities Commission has fully approved crypto exchange to run in the country. 

The first exchange to earn the approval from the Suruhanjaya Sekuriti Malaysia (the Securities Commission Malaysia) to run a digital asset exchange, was crypto exchange Tokenize Malaysia. The exchange has been welcoming new clients since then.

Following the approval, the Chief Executive Officer of Tokenize Malaysia, Hong Qi Yu said:

“The digital asset industry is by far one of the best equipped and it is business as usual for us as the industry is used to working and communicating effectively across time zones and managing teams remotely,” according to the Malaysian news agency Bernama.

Referring to the developments, Hong Qi Yu said that it was the perfect timing from the SC to give the approvals, pointing out that his exchange saw a great increase in interest in digital assets from clients aged 24-50 years.

Apart from Tokenize Malaysia, the other two crypto exchanges that got the approval were operators Luno Malaysia and Sinegy Technologies. Bernama reported that 23 crypto exchanges applied for the license, however, only those three got the approval. Out of those, Leno Malaysia was the first exchange to meet all of the regulatory guidelines. The Securities Commission Malaysia made an announcement in January, listing the requirements for crypto offerings. 

Operators that didn’t receive the approval at the time were forced to halt all operations.

“Entities which have not been approved by the SC, including those which have previously been operating under the transitional period, are required to cease all activities immediately and return all monies and assets collected from investors.”
 

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