There has been a lot of debate over the years if cryptocurrency will replace fiat currency. While that may have been a bone of contention in the past, recent events around the world show that digital currencies could most likely replace government money. Deutsche Bank, for instance, revealed in its study that the latter may be the case by 2030. Therefore, these assets have grown from being speculative instruments to offering real-world use cases. But why is that?

The first cryptocurrency, Bitcoin, was launched in 2009, and since then, its blockchain has shown a lot of benefits. These benefits span across decentralization, transparency, immutability, speedy transfers, etc. Each of these is highly beneficial in the payment industry where money has to be sent and received easily and speedily, without any location barrier.

Central Banks Look into CBDC

Central banks are also looking to launch Central Bank Digital Currency (CBDC) in a bid to facilitate seamless transfers. For example, central banks in Britain, Japan, the Eurozone - Sweden and Switzerland are assessing the use cases for CBDC. While CBDCs may not be decentralized as some cryptocurrencies, they will still rely on blockchain technology. This means that a central authority will manage their use, while they still reap the benefits of the blockchain including speedy transfers, borderless payments, and lower fees.

In line with that, a bank like JPMorgan has already launched its cryptocurrency, JPM coin to facilitate the "instantaneous transfer of payments between institutional clients." What's more, the world's fourth-largest bank, Wells Fargo is looking to launch a cryptocurrency. In November 2019, Germany passed a bill allowing banks to issue and store cryptocurrencies. Who knows, it may soon become a trend for banks to launch their own digital currency.

More SME's in the US Adopt Crypto Payments

Hartford Steam Boiler’s (HSB) nationwide survey showed that a good number of small and medium-sized businesses in the U.S. are now accepting crypto payments for their goods and services. Specifically, 36 per cent of these SMEs are accepting this asset class. Also, 47 per cent of such businesses have been operational for five years or less, while 21 per cent have been running for over 20 years.

In line with that, reputable companies around the world have already joined the trend of accepting Bitcoin, Bitcoin Cash, and other cryptocurrencies. An instance of this is the case of Microsoft, on its Xbox and Windows store, Overstocks, on its eCommerce marketplace, and even, for its membership subscriptions. This shows a growing trend that cryptocurrency is now serving as an alternative to fiat.

Facebook and Other Large Players Enter Crypto Space

In June 2019, Facebook revealed plans to launch a global currency in 2020. Libra, the asset in question relies on the blockchain and even though it will be centralized, it is still considered a cryptocurrency. Since Facebook made known its intentions, other big names have ventured into space, in a bid to also launch a crypto asset.

Reasons Why Cryptocurrency May Replace Cash

Some reasons why cryptocurrency may replace cash include:

1. Fast Transfers:

No one wants to wait for days unending for the money they sent abroad to finally get to its destination. Compared to fiat payments, crypto transfers are faster irrespective of their destination. Therefore, the ability to send money to another individual in a continent different from yours and within seconds makes this asset class quite attractive. The use of stable coins takes it one step further to ensure that the value received is the same as what was sent.

2. Lower Fees:

A Bitcoin transfer of $1 billion (now valued at $800 million) attracted a fee of only $600, which is considerably lower compared to fiat transfer fees. The same amount being transferred via banks would've attracted a much higher fee. As such, a lower fee is one of the major incentives for companies to dump their fiat for cryptocurrencies. There are no intermediaries during transfers, which helps to reduce fees.

3. No Chargebacks:

The immutable nature of the blockchain prevents chargebacks since transactions can never be reversed. Imagine what it would look like to receive payment from your customer, only for a company such as PayPal to retract the money due to a complaint? That would mean running into a loss even if the product was not defective. However, it is easy for fiat currency to be reversed by a bank.

4. Aid During Economic Meltdown:

Countries such as Turkey, Venezuela, etc. which have suffered inflation and devaluing national currency have turned to Bitcoin. In this case, citizens in these countries convert their fiat to the crypto asset in order to maintain the value of their money. Therefore, here's one more avenue cryptocurrency has shown more value than fiat. These assets have also become useful during disputes between countries as was evident in the U.S China trade war, and the U.S. Iran war.

5. Borderless Transfers:

A study from 2017 revealed that 1.7 billion adults are unbanked, given that it has been decades since the advent of banks. That being the case, it means these individuals cannot send or receive fiat locality or abroad. On the contrary, cryptocurrencies can be used for payments and all that is required is a smartphone connected to the internet. Third parties such as banks are not involved, and neither do they have to go through several verification processes.


Cryptocurrency is the future of money and it could replace the fiat currency system due to the benefits it offers over fiat. Transactions are faster and attract lower fees. Also, cryptocurrency transfers cannot be reversed.