Crypto does have many advantages over government-controlled fiat. However, there are also several barriers it would need to overcome to become the standard.
First, there is the regulatory barrier regarding crypto and fiat
For crypto to work, governments across the world will need to work together. This is possible, but it could be a long process. And there hasn’t been much consistency so far. China banned trading, but people can mine freely. Japan allows all crypto, as long as it’s registered and meets compliance standards. In the U.S. the SEC continues to deliberate. While a major advantage of crypto is the lack of border, this is also its flaw unless nations can agree.
The second barrier is simply wider adoption
Considering the growth of crypto over the last decade, this is not its most challenging barrier. And developers have definitely been working to make create more user-friendly apps and automated services. Stricter regulations will definitely make investors feel safe.
But for cryptocurrency to completely replace cash, everyone in the world will have to be informed. In the U.S., it may seem that everyone has computers, smartphones, and the Internet, but many people do not.
Finally, the biggest barrier is scalability
The government controls how many dollars are in circulation, with the aim of mitigating national debt and protecting our economy. This system is not perfect, as we found out in 2008. But compared to fiat, crypto is currently too volatile. It doesn’t yet seem feasible to buy a cup of coffee with something where the value and look radically different in a few weeks.
And just as whales currently hodl assets, they will continue with this behavior even if Bitcoin becomes the standard currency. This will mean that less of the currency will enter circulation. At least, this is one school of thought.
But developers are constantly trying to fix scalability issues. One recent hopeful is the stablecoin. A stablecoin attaches to fiat or a commodity to help add stability to the market. At this point, stablecoins are still very new, but they do offer some hope in solving the volatility issue.
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