Traditionally, legal tender means that currency that we use in our daily lives. Also known as fiat money or fiat currency, this money is (or was) backed by gold and had an intrinsic value for quite some time. We have relied on these fiat currencies for years, and have gotten used to it. However, there are some inherent flaws to this system where cryptocurrencies can help to solve. Currently the value of all cryptocurrencies in the market is under $100 billion as against the face value of US Dollars which are worth almost $1.4 trillion. As against the value of US Dollars, cryptocurrencies look miniscule, but do they have the power to completely take over fiat currency? Here are some points that show us how this can be true.
Growing interest in cryptocurrencies
When all the cryptocurrencies rallied exponentially in 2017, many attributed it to the growing intrest amongst people for cryptocurrencies. There were millions of people who have started to buy, sell and mine cryptocurrencies, which eventually increased demand. However, for cryptocurrencies to eventually be equal to and take over fiat currencies as a medium of exchange, it has to be able to retain peoples interest and adoption so that people and businesses are using them on a daily basis. Without encouraging people to use cryptocurrencies on a daily basis, there is no way for it to become a daily use currency adopted by everybody.
How industries should respond
Already, there are businesses which are accepting Bitcoin and other cryptocurrencies as valid forms of payment. As the popularity of cryptocurrencies grows, so will the number of businesses that will accept them as a form of payment. Some online retailers too are accepting Bitcoin payments, and even some financial products are available that accept or invest in cryptocurrencies. The more industries accept cryptos from Online Cryptocurrency Exchanges the more popular they can get as a medium of exchange and investment.
Due to its decentralized nature, cryptocurrencies are not regulated. However, some governments across the world do need to control the flow of money in their economies as they have a vested interest for the same. Some countries like China have even punished those who trade in Bitcoin altogether. However, with the passage of time, governments will need to acknowledge and frame regulations for the use of cryptocurrencies.
Adoption of cryptocurrencies domestically
As mentioned earlier, cryptocurrencies will need time to be adopted by consumers and businesses alike. To help people adopt cryptocurrencies, there have to be dedicated efforts on the part of Cryptocurrency Exchanges and others involved in the trade of cryptocurrencies to ensure that cryptocurrencies like Bitcoin and others are used for trade on a daily basis.
Adoption of cryptocurrencies internationally
As more and more countries adopt cryptocurrencies gradually, there will be a time when Bitcoin or others will replace the US Dollar and the Euro as the preferred currency for international trade.
These are just some of the ways in which we can ensure cryptocurrencies become a viable alternative to fiat currencies. Although the road ahead seems challenging, there is no doubt that cryptocurrencies are going to rule the roost in future. Let us see how the hurdles are crossed to ensure that the transition from fiat to crypto is gradually smooth.