In the wake of Russia considering it's own national crypto-currency, a thought struck me. Can crypto-currencies replace traditional government-backed currencies like US dollar?

Volatility of crypto-currencies/Bitcoin

One of the reasons I think cryptos cannot replace traditional paper currencies is because of the volatility factor.

Lets take a look a Bitcoin. Now Bitcoin is an extremely volatile and unpredictable crypto. Let's look at it's all time price chart.

As we can see, it had a super surge in the December of 2013, it reached over $900. It hasn't been able to cross that price as of yet. It even sank to below $200 in the beginning of 2015. Right now, it sits as $666. The number of the beast right? Because of this kind of volatility, Bitcoin is not a reliable alternative for traditional currency. Most online stores initially didn't accept Bitcoin because of this volatility. Of course, now they convert the Bitcoin immediately into USB as I assume. You can never know when it may skyrocket or just crash into the ground.

Disadvantages of physical money

Some of obvious disadvantages of physical money are loss and damage. It can damaged eg. ripped up, torn apart, burnt and so on. It can even be lost. This makes dealing with traditional money troubling and expensive. It is also totally anonymous. Which basically makes it just a physical object. You hand it to the cashier, you get the groceries. Totally anonymous. Then there are also worries that it may be counterfeited which is a big worry in today's world.

Most governments prefer the use of cashless payment methods as they can be regulated far more easily. These methods take away the anonymity factor as they are controlled by banks which in turn are controlled by the governments.

Advantages of Crypto

One of the big advantages of crypto-currency is that it may be transferred across borders with absolute ease. A person in China can send crypto to you in Alaska. Cryptos also give the user that anonymity that is oh-so important in the present world. The low transaction fees make cryptos very attractive to new users. Another big plus for crypto-currency is that crypto-currency does not depend on the political situation of a country. We all know what happened to GBP after Brexit. Even people that do not have good access to the mainstream financial services may be tempted to use crypto-currencies. These people are generally in under-developed countries. As crypto does not depend on politics, they may as well be attractive to the people in those kind of countries.

Why I cannot see any government adopting crypto

The big reason is that crypto-currency is largely unregulated. And governments hate that. It's just bad for them. Any one can fraud easily if there is no regulation. Failed exchange sites are big examples of what I'm talking about. If somehow someone finds a way to "regulate" the crypto-currencies, we may start seeing them being globally accepted but I don't see them happening in the near future.

As the need to eradicate traditional and government-backed money grows, we can say with certainty that there will come a time when crypto-currencies emerge and replace the traditional money. I hope I live long enough to see that day because it surely would be a sight for sore eyes.

#cryptocurrency #money #finance #investments #life #steem #steemit