Cryptos Can Never Take Over Paper Currencies
The idea of using cryptocurrencies in business deals evoked plenty of excitement, when they were launched. The fascination continues till date. It is why experts/professionals wonder if ekrona software are going to take over the financial world. Others, who are more skeptical, wonder if cryptos can even be called currencies. If they are not, they cannot replace cash.
Anything is Money
Technically, anything may adopt the label of ‘money’. It is only that the purchaser and the seller must agree to regard it as such. Party A takes something that belongs to Party B, and pays for exchange of ownership, in any form.
This exchange of ownership existedfor several centuries, as the barter system. People would exchange foodstuffs, grains, bolts of cloth, etc., with one another.
Later, people began to pay for goods with silver coins or bags of silver. Silver was replaced by gold, after some time. Even here, coins or bags of the stuff came into play.
Finally, paper currency and minted coins made an appearance. They continue to dominate even today. The arrival of cryptocurrencies has not made much of a difference.
Paper Currency Offers Stability
It was a long time before people realized that the barter system, or payment for goods/services with silver/gold (coins/bags) was an unfair system. For instance, bartering one liter of water for a liter of edible oil, made no sense. Similarly, the owner of silver/gold coins could bargain and set his/her own terms. The seller could gain or lose, depending upon the purchaser’s whims and fancies!
Paper currency awards a certain value to every service/good. It is available in big and small denominations. Furthermore, there are metallic coins to supplement small denominations.
Enthusiasts welcomed cryptocurrencies in the 21st century, as the perfect way to decentralize the financial system or money. They believed that paper currency would lose its worth, if a larger number of people could be lured to use digital currencies.
However, paper currency offers a stability that cryptocurrencies can never do. Crypto markets thrive on volatility, thanks to fluctuating economic and political scenarios across the globe.
Governments Grant Importance to Value
Cash is valuable on its own. It does not acquire value, because it is in the form of paper currencies or coins. Several nations bear this in mind, even today.
Some countries impose restrictions/limitations on cryptocurrency trading. Others have gone a step further via complete banning. If this is not enough, cryptocurrencies are being brought under taxation systems.
Governments, across the globe, prefer to have control over their respective country’s economic situation. Each nation has its own type of paper currency. It takes an in-depth look at the external and internal pressures disturbing its country. In turn, it decides how much of currency should be printed for that particular year.
In contrast, there is no control over the circulation of diverse types of cryptocurrencies. The crypto world is a decentralized one There is no restriction on how many new coins should enter the picture, annually. Different blockchains may come up with different figures, to beat the virtual competition. Even with capping in place, the figures may not be reasonable.
Cash and Cryptos Should Co-exist
If frauds can take place in the real world, can they not occur in the virtual world, too?
Yes, of course, they can, and more easily, for the crypto world operates on anonymity. Additionally, blockchains are decentralized. Therefore, they assist, albeit unconsciously, in money laundering, illegal business dealings, tax evasions, hacking, demanding ransom, etc.
Then again, there are numerous digital currencies in the virtual marketplace. It is hard to decide which are reliable and profitable, and which are not. Even the most experienced of traders/investors cannot predict anything perfectly. Furthermore, many crypto fans are only seeing these digital currencies as means to accumulate wealth. They hoard them, and sell them when the time is right. They do not really worry about whether cryptocurrencies will replace cash or not, neither now, nor in the future.
Thus, replacement of cash with cryptocurrencies does not seem feasible at all. First, there must be regulations in place for various aspects connected with the operations of blockchains and crypto owners. It would be best to continue their co-existence, as is happening now.