Bitcoin is one of the most valuable digital asset in these days. Satoshi Nakamoto the inventor of bitcoin saw the future of money. Though, his figure is still anonymous, the present of bitcoin is the present of Satoshi Nakamoto vision. Will bitcoin and cryptocurrency replace fiat? The question is on the top search of keywords on search engines but the answer is not satisfactory.
WHAT IS FIAT CURRENCY
Fiat money is a currency (a medium of exchange) established as money often by government regulation, that does not have intrinsic value. Fiat money does not have use value (inherent utility, such as a cow or beaver pelt might have), and has value only because a government maintains its value, or because parties engaging in exchange agree on its value.
Fiat money has formally used in all nations. It is also traded on exchanges. Fiat money has different value every country. Central banks print the money to maintain inflation rate.
China has a long history with paper money, beginning in the 7th century. During the 11th century, the government established a monopoly on its issuance, and about the end of the 12th century, convertibility was suspended. The use of such money became widespread during the subsequent Yuan and Ming dynasties.
Fiat money is the replacement of pure gold and silver. The value comes from the government who issues the money by collecting tax with fiat from public. Until now, the practice of fiat money is done by central banks around the world. Central banks has monopoly to destroy or to print the money.
No other institution can controls the central banks activities. The one that control the central banks is the authority. In this case, there are some illicit activities between central banks and governments. Public see that printing money is normal but Satoshi Nakamoto see different views. Monopoly and centralization of finance has caused economic gaps. A group of people or person will be valued by one money.
BITCOIN AND CRYPTOCURRENCY
Bitcoin breaks all the rules that has buried people financial freedom for thousands years. The idea of decentralisation money earn encounters from bankers and economists.
However, since more people are eager to have financial freedom, bitcoin has more value. Bitcoin with fixed supply is finally accepted by thousands merchants around the world.
The invention of bitcoin triggers some developers create new coins. The new coins offer or complete the need of virtual money then it is the brith time of cryptocurrency. New coins are created with innovation and modification.
Some coins copy the bitcoin tech but others are far from bitcoin basic. Ethereum with smart contract has open new paradigm of cryptocurrency. Smart contracts enable financial services run on the network without intermediary.
PUBLIC NEED FINANCIAL SERVICES NOT BANKS
Banks are institution that work on financial services. People can save, withdraw, lend and borrow money from banks. Those financial services in digital age are complicated and too long of bureaucracy.
Cryptocurrency with smart contracts enables to apply financial services in the protocol, like saving, withdrawing, lending and borrowing. The born of defi has taken some of banks services on the cryptocurrency protocols.
With the born of defi more people are attracted to cryptocurrency. Some big companies also put large investment on cryptocurrency projects like paypla, coinbase and microstrategy.
WILL BITCOIN REPLACE FIAT?
Bitcoin is fixed supply asset. The total supply is 21 million. To be means of exchange , bitcoin is too worthy. Now bitcoin becomes the digital gold. People buy gold for securing their asset in the form of bullion asset. Bitcoin is the digital gold that has good intrinsic value. Bitcoin will not replace fiat but it will replace gold as the digital gold.
WILL ALTCOIN REPLACE FIAT?
There are many stories how bitcoin holders regret to sell their asset in low price. Now more people will keep their cryptocurrency to replace fiat because the value of the cryptocurrency asset is predicted to rise in the future years.
Ethereum with smart contract as the native coin of ethereum network now become a digital asset. More people will think twice to spend their ETH like using fiat. Does it mean cryptocurrency will not replace fiat? There are thousands cryptocurrencies in the market. There are new projects created everyday. To bridge between saving asset and money for spending, some developers create stable coins.
Stable coins with their algorithm are pegged to 1 USD. The price will move from few cents minus and plus from 1 USD. Stable coins will replace fiat in future years. The issue of volatility is answered by launching stable coins.
In the market there are some stable coins that are widely used like Tether, True USD, DAI, AMPL and other stable coins. Those stable coins that will replace fiat as means of exchange. People will use stable coin to shop and do some activities like fiat. Some decentralised financial service accept stable coins as the liquidity asset.
Bitcoin will not replace fiat but it will be the digital gold as the saving asset. More people buy bitcoin to invest by keeping in the wallet. Stable coins could be the cryptocurrency that will replace fiat.