Cryptocurrencies have seen significant adoption as an alternative means of payment for goods and services. Although when compared to other forms of payment like FIAT currency, its rate of adoption remains low.
Among cryptocurrency enthusiasts, there is huge optimism that with time, the technology will become a dominant force within the financial solutions industry. This idea is however not sailing through without some form of anticipated resistance.
Understandably, governments and regulatory agencies would not easily permit a technology that is yet to be fully understood by a lot of them. Besides, the level of shake-up and disruption that a drastic change will bring can be unprecedented. Still there is the assumed fear of loss of control by centralized institutions when cryptocurrencies go mainstream.
While the factors mentioned above are relevant, an internal question for the cryptocurrency industry to answer is whether it is ready to scale as a mainstream payment vehicle. If not, what are the conditions needed to achieve this?
In order to become a universal payment instrument, cryptocurrencies and their functionalities must be well understood. Considering this factor, there is still a lot of work needed to be done in terms of awareness as only a small segment of the world’s population have even heard about Bitcoin.
Cryptocurrency runs on blockchains that depend on the internet. This technology is yet to cover a significant part of the globe. Although mobile technology is fast spreading and reaching the nooks and crannies of the world, it remains a prelude to cryptocurrencies.
For an instrument to become accepted as a payment vehicle, it must be effectively usable. In 2017 before the Bitcoin hardfork that gave rise to Bitcoin Cash, transaction confirmation time became a nightmare for most users. Situations like that make the cryptocurrency unusable for payments since the recipient has to wait for extended periods before receiving value.
The current extent of price volatility of cryptocurrencies does not support widespread usability. Imagine the value of payment received for goods or services changing between the time of sale and payment. This is one of the reasons why so far, such payments are limited within the network of enthusiasts who are willing to bear the risks involved.
Having considered the factors above, it is obvious that cryptocurrencies have every potential to compete with fiat as a dominant means of payment. However, certain crucial developmental hurdles must be crossed both within the ecosystem and beyond.
Obviously, work is being done to pursue a prominent status for the disruptive technology, and genuine progress is being observed. Therefore the question goes beyond “IF” cryptocurrencies can replace FIAT currency. It is now a subject of “WHEN” this can happen.
Tell us what you think, could cryptocurrency replace FIAT Currency?
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