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Cryptocurrency is a hot topic in the money market. Countless debates are being done for the same and several industry experts have put their thoughts and concern over this. And many of us are thinking about will crypto currency ever replace our local currency? Before we come to the straight forward answer for this, we must understand some basic technical aspects, uses, challenges and impact of crypto currency.
Technical challenges of Cryptocurrency
The very basic technical challenge of crypto currency is it is a decentralized virtual currency. Means there is no control of anyone on crypto currency. Ledgers and data gets managed by the public itself as a blockchain. We will not go into more technicality of this than what is blockchain.
In simple terms you should understand that it is a computer based algorithm which defines the existence, control and transaction information data of crypto currency. Unlike physical actual banks and real money which we can touch and feel and can be used by anyone whether a person is educated tech enthusiast or an illiterate person.
Crypto is a virtual currency which can’t be touched and felt. You can just see the virtual data on your computer or mobile phone. Therefore crypto currency is not end user friendly. If a person is not technically sound and not literate then there is no way to teach that illiterate person or technically weak person how to use crypto currency for paying their bills or buy or sell something.
Security Threat Of Cryptocurrency
One can argue that cryptocurrency is a safe virtual currency and chances of being stolen or being lost is very less. But this is a wrong argument because think about what will happen when your computer or phone will be hacked or your crypto wallet account will be hacked? Is there any safest way to recover your cryptocurrency?
No, there is no safest way or any way to recover your lost cryptocurrency. Virtual money is gone forever. You can’t bring that back. Because there are no strict government guidelines for this and no government has full control and regulations over its uses. Hence there is a lot that needs to do in this area. For your physical money you can claim your amount with your bank but in regard to crypto there is no way.
Another scenario is what will happen if you lost your crypto wallet password and you forget the method to recover the password or lost the crypto key? Will you be able to recover? Absolutely not. Once you lost the password and lost the method to recover your password then everything is gone. But for your physical money, if you lost your banking password or lost your account details then you can get it recovered from your bank by visiting any of your nearest bank branches. But for Crypto you can’t.
Uses of Cryptocurrency
Cryptocurrency is a new baby in the crowd and it has to grow up. In a fast paced economy every official transaction is being done with physical local currency or with international currencies such as Dollar, Pound, Rupees Riyal etc. And there is no international standard till date for its acceptances and uses. All trades are being done with internationally recognized physical currencies only. So in this situation it is almost impossible to buy bread and butter with cryptocurrency for now.
We can travel to any country and can get our local currency converted in that country’s local currency to buy things and services. But we cant buy things with cryptocurrencies in all the countries, there are very few countries which are accepting crypto as mode of transaction but in a very limited ratio.
Economy Challenge
Since cryptocurrency is a decentralized virtual currency and there is no governmental control over this. Then in this situation it is impossible to track the transactions, savings and expenses of a person. And it gives a clear loop whole for crypto users to avoid taxes. How will a government control its tax systems if everyone starts using the crypto currency as their preferred mode of payment? Don’t you think it is a nightmare for the government to track the data. Hence it is a direct loss of revenue for any government. It is a serious economic problem and challenges which will dent the growth of a country.
Environmental Challenges
Cryptocurrency comes into existence from crypto mining. And crypto mining consumes electricity to power the computer systems which run cryptocurrency mining softwares to mine and collect cryptocurrency. This impacts our environment heavily and badly and no one can ignore this fact. Some can argue on this by giving some example of physical currency that physical currencies too consume paper, ink and electricity to print and bring into existence but still the impact of crypto mining is heavier on the environment than the physical currencies.
Social Impact
Uses of cryptography will attract serious threats to any government. It would be impossible to track the uses of funds. Who has sent the fund and for what purpose it is quite challenging. This will have serious social consequences and every government must be worried about it. Because no matter what a government does, the basic nature of crypto and blockchain does not allow anyone to know its actual behavior.
It is completely anonymous. Only the person who will pay and the one who will receive will be able to know the status of their funds and transactions. Now with the above valid points we are in a position to answer this question: Will Cryptocurrency ever replace your local currency? And the straightforward answer is no, cryptocurrency will not replace your local currency ever. No matter how strict and transparent regulations come into existence by any government, the technical challenges of cryptocurrency will not allow any local currency to be replaced by it.
Will Cryptocurrency Ever Replace Your Local Currency? FAQs
Will paper money be replaced by cryptocurrency?
No, cryptocurrency can never replace paper money due its several technical and security challenges which we have mentioned in our this article.
When do we expect cryptocurrency to take over paper money?
Cryptocurrency will never take over paper money regardless of its growing use. Since it is decentralized virtual money which is against the governing law of any country’ finance department.
Will cryptocurrency replace banks?
No, Cryptocurrency can not replace banks ever. Because no country can afford to run their economy based on a virtual currency which is decentralized and there is no physical control over its uses. And also not every citizen of a country can understand how to use it in their daily life.
Is cryptocurrency the future of money?
There has been a lot of talk in favor of crypto currency but still it will be novice to say that cryptocurrency is the future of money. Despite several debates in favor of crypto that promise flexibility, economic growth and speed, cryptocurrency is not the future of money due to its several technical and practical challenges. However crypto can be used as an optional mode of transactions parallely to the actual physical currency and banks.
Conclusion
With the above valid points we can safely come to the conclusion that Cryptocurrency can not ever replace your local currency. But we may also not ignore some of the benefits of the crypto currency. So instead of expecting the cryptocurrency to replace the local currency completely and see it as an alternate of physical money, governments should bring regulations to implement the uses of cryptocurrency and find a way to use it parallelly of physical currency. So this way certainly we can take advantage of crypto. So this can be used as an optional mode of payment and transactions with some limitations and strict guidelines.
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