How can Cryptocurrency Replace Cash?
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To convert cash to cryptocurrency, you will need a broker who will handle cryptocurrency transactions for you. The broker can collect your cash and transfer the equivalent value in cryptocurrency to your wallet. Note that you have to pay an exchange fee to the broker as well as tax on the cash that you want to convert.
Even though crypto enthusiasts don’t know the outright answer to the question “how can cryptocurrency replace cash”, they keep talking about how crypto is going to become the currency of the future and replace the dollar in the united states. For now, there is little indication that this will happen because of the reasons below.
Because of crypto’s volatile value, creating a tax regime for it will be a hassle for the government as well as buyers and sellers of products alike. In that case, the federal government will like to stick with the dollar, which is properly regulated and easier to tax.
For example, there is only 21 million bitcoin in the world, to keep the crypto stable. That is not enough for the over 400 million people in the United States of America alone, not to talk of people outside the United States itself.
Even though crypto enthusiasts keep talking about how crypto is going to become the currency of the future and replace all fiat currencies. Its limited supply means it will be hard to replace the fiat currencies of this world. Although, it will surely take a major role as more and more countries come to accept it.
Money will continue to exist, either in cash form or in digital form, while cryptocurrencies like bitcoin and other altcoins will continue to exist alongside it. But again there is no predicting how fast technology might bring the multiverse along, and that will be a major game changer to how crypto replaces money in the future.
future of payments
As much as crypto enthusiasts, traders, and investors will tell you that cryptocurrencies will soon replace Fiat currencies, they point out how the lack of a regulatory agency such as a central bank or a tax agency means the owner of the coin owns the coin 100% and measures such as the government freezing your bank account to punish you, or extorting you of your money don’t apply. They also point out how bitcoin is transparent and can prevent financial misappropriation like money laundering and embezzlement. However, the main reason why cryptocurrencies at the moment cannot replace fiat currencies is as follows.
Part of the reasons why a country like China and countries in Africa like Nigeria and the Central African Republic have banned cryptos is that they believe that it is dark money that is not regulated by any central authority and can be used to commit a crime or undermine their country’s sovereignty. And their fears are not unfounded either. However, this is expected to change in the future as government enacts better rules and regulations to regulate crypto. More efficient and transparent crypto like Tectum (TET) will enter the market. This should increase governmental trust in crypto and a greater willingness to adopt it alongside a fiat currency.
The entire process of mining crypto like bitcoin uses a lot of energy. This is part of why it was banned by China and several other countries in Asia. Unless something can be done to make crypto less power intensive, many countries especially in the global south don’t have the power infrastructure of countries like Europe and the US will never accept it.
In the meantime, before cryptocurrencies completely take over, some cryptos like Tectum (TET) are using a different blockchain model from the Proof of Work model that the Bitcoin blockchain uses – which is much better for the environment. The TET blockchain model also makes the crypto easier to mine, which is something that governments might consider when it wishes to adopt cryptocurrency alongside fiat currency.
