Cryptos, fiat, what are these? Cryptos refers to cryptocurrencies. Cryptocurrencies are digital or virtual currencies that leverage on a technology called blockchain to carryout financial transactions in a secure, immutable and centralized manner.
Bitcoin is the first cryptocurrency hence, the reason for its popularity. Some people often refer to other cryptocurrencies as bitcoin. There are over 2,000 (two thousand) cryptocurrencies in the world presently. This number is going to keep on increasing as many people are working relentlessly on creating other coins with possibly better features than the existing ones.
Fiat in Latin means a decree “it shall be done”. It could also be translated as “let it be done”. Fiat money or fiat currency is a legal tender whose value is derived from the government that issues rather than a physical commodity or good like gold or silver. This means that fiat money does not have intrinsic value. The value of the money is based on market forces (supply and demand forces) and the strength of the government that issues it. In economics, whenever demand is more than supply, the prices of things go up and vice versa. Almost if not all modern currencies are fiat money. Examples are US Dollars, Pounds, Euro, Yen, and other currencies.
The question asked earlier (the topic of this article) has made the headlines of a sizable online forums and Newspapers’ finance sections. This argument has always been a heated one between tech and economics gurus. Most proponents if not all proponents of cryptocurrency strongly believe that cryptos will face out fiat money. Critics laugh at how shallow and naïve the claim sounds. Nevertheless, is there a likelihood of it happening?
Eye brows have been raised concerning the volatility of Bitcoin. From rising to $10,000 in November, 2017 to $20,000 in December of the same year and crashing back to its normal price in January 2018. it is pertinent to note that bitcoin was never made to become a commodity asset. Its primary purpose is succinctly stated in a whitepaper with the title, “Bitcoin: A Peer-to-Peer Electronic Cash System”.
Since the beginning of this year (2019), many companies have been trying as much as they can to proffer a solution to the problem of volatility. A number of people believe that there might not be a single cryptocurrency that might win the “race”. Rather, it is speculated that a type of cryptocurrency will come into being that will have the ability to render this service.
Ormeus announced its partnership with COTI (Currency of The Internet). COTI created the world’s first-ever Directed Acrylic Graph (DAG) protocol specially designed to create decentralized payment networks and “non-volatile” coins i.e. stable coins.
No doubt that cryptocurrency replacing fiat does not have a yes/no answer as it is still in its infancy stage, and just like every other disruptive technology prior to cryptocurrency, the full adoption we all expect to see might take time. It is not likely that Crypto will replace fiat currencies, but it’ll be a strong alternative.