Top Two Reasons Why Bitcoin Can't Replace Fiat Currencies ...
Just wanna address the controversial concept in cryptocurrency community and that is whether bitcoin can replace the fiat currencies or not.if we read out posts and comments on different social media,news on the news channels and discussion on forums and cafes they all talk about how Bitcoin / cryptocurrencies can replace the fiat currencies? Can Bitcoin be the revolution that takes down the central / commercial banks worldwide .?
Bitcoin is not capable of implementing the below two basic functions of monetary policy
Bitcoin isn't inflationary :
In any economy consumption is the main component due to which people spend their money which means in the long term you need inflation.Now most people think that inflation is bad. Inflation no doubt is bad but inflation around 2% is very healthy for an econom because that ecourage people to spend their money.Bitcoin now is inflationary but in the long run that’s going to decline.So in order to make bitcoin to replace the fiat currencies we need inflation. So thats the number one problem.
We need credit :
We need money that is demand driven that can be pull not push. What do I mean by that is that we there is need for money in the economy we need monetary policy. So credit in a Bitcoin based economy would be rather difficult. Monetary policy helps alleviate both credit crunches and overheated economies through influencing interest rates.
So for the bitcoin to replace fiat currency it would have to lose its function of store of value to become a real currency that encourage spending and would no long be an investment anyway in order to operate as an alternative to traditional payment channels fiat currencies for remittances and general business transactions for those who "opt-in.
So you can’t be a store of value and currency at the same time.You have to quite one.You can’t serve two masters at a time.Let the traditional currency take the sense of what a currency is and let bitcoin become something else.Let it become the king of remittances.Let it become the currency of the people ,for the people and by the people worldwide.But we do’t need it to support the economies of the world.We do’t need it to replace the fiat currencies of the world to be successful because if you do look bitcoin today you are ecourage to hold it today and not spend it.We can’t imagine an economy based on such a philosophy.
Agree or disagree with me? Feel free to share your thoughts on this idea.! I love debate and I believe good questioning is half knowledge.
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A very interesting article! Bitcoin cannot replace FIAT in the long term. It doesn't necessarily have to be bitcoin either, there are many other good ideas maybe even better ones. We are still very much at the beginning with the whole thing, in the middle of 2017 there was a real crypto hype and that was just the beginning. In the future we could have other possibilities thanks to the Blockchain technology. The Blockchain technology will be integrated more and more into our everyday life in the future. Maybe in the future, banks will only be service facilities where you can buy insurance. I look forward to the future.
@ cryptodiga exactly and well said. Like Jack Ma (Alibaba)said,"I personally do't know about the future of bitcoin but the blockchain technology is amazing and has bright future."
I agree. too many investors are hoarding, so it can be used a store of wealth not spending. Gold and silver are similar, until you can peg it to the dollar, or RMB etc.... Not to mention, it is still speculation. I am for having a crypto, that is backed by gold or silver, but precious metals that are already mined, not will be, so there is an existing tangible value.