Bitcoin and altcoins replacing fiat currency? Fiat currencies have been dominating in the market. If the mind can remember. It is first used since AD1000. Today, it is facing challenges in the form of cryptocurrencies. Nobody has thought that this can happen. However bitcoin and other cryptocurrencies had changed the whole world. They dominated financial headlines all over. But does bitcoin and other cryptocurrencies be able to seriously challenge the fiat money?
The crypto-market only represent a very small portion of valuation. Compare to the entire financial market, which is less than 10%. It is still relatively new. It is also not yet mature. Regulations are still on coming for cryptocurrencies. To really replace fiat money will surely take many years to reach that.
However as of 2018, about 54 major companies are accepting bitcoin as payment. There will be more following this trend. There are generally wide acceptance of bitcoin and other altcoins.
First, we need to compare the financial model that bitcoin is based on. Then compare it to the traditional fiat money. There is a distinct advantage of the bitcoin financial model. It is neutral, borderless and frictionless system. These characteristics reduce operation cost. It also avoid corrupted government.
If bitcoin is to replace traditional money, its value must reach about $213,000 to replace the US dollars. This is according to a UBS report. It must be used like money as well. Truly, it is still in the infant stage. However it could possible replace fiat money in the future.
Bitcoin can perform the function of money and to achieve wide adoption. However, 3 main roles need to be addressed:
- store of value
- medium of exchange
- unit of account
Currently, bitcoin is also a store of value. Numerous investors buy and keep both bitcoins and altcoins. They believe it has a value. They believe this value will increase in the future. Regarding the next 2 roles. Bitcoin and altcoins need to address scalability. Also they need to address design and regulation. Bitcoin is currently on its way in addressing scalability. Thats why you heard of bitcoin lightning network…etc. Bitcoin also gain so much popularity. It is self sustainable. It is just a matter of time for bitcoin to be on par with fiat money.
Ok, so what can be the nearest in replacing fiat. It could be bitcoin lightning. It enables fast transactions among participating nodes and has been touted as a solution to the Bitcoin scalability problem. However, it is still not mature or reliable yet.
Though not in the short term. But perhaps about 8-10 years later. It will not replace fiat money. However, it will still count as an alternate important source of financial transaction as important as fiat currency. So what do you think? Can bitcoin replace fiat currency? Or how many years more to achieve that? Or decades?