Will Cryptocurrency Replace Other Forms of Payment? To answer that question I look to author Andrew Smith who is credited with the quote. “People fear what they don’t understand and hate what they can’t conquer.” I believe this quote can be applied to many situations and still hold true.
For instance, one area in which this quote may hit the mark is with cryptocurrency. Of course, it may not be fear itself that is driving the cryptocurrency craze. Instead, it could be fueled more by FOMO, or fear of missing out.
This leads me to question whether or not cryptocurrency will replace other forms of payment.
What is Cryptocurrency?
Cryptocurrency is a form of digital currency that uses encryption to make financial transactions secure. As a result, monetary exchanges are difficult to forge and do not require bank intervention to complete.
You can’t hold cryptocurrency in your hand or pocket. The only place it exists is on computers through the exchange of digital currency.
Why is Cryptocurrency Gaining in Popularity and Can Cryptocurrency Replace Other Forms of Payment?
There are a lot of reasons why cryptocurrency is currently making strong gains in popularity and use. When taken together these reasons could be enough to secure cryptocurrencies place in our society and replace other forms of payment in the future.
Cash is heavier, dirtier, easier to steal, and easier to forge than digital currency making it less appealing than its digital replacement. Checks, as an alternative, can also be easily stolen and forged and take up more room than cryptocurrency.
Other forms of payment, such as credit and debit cards, are similarly less appealing in comparison to digital currency because they can be hacked or stolen costing you thousands.
Transaction fees that banks charge for the exchange of money may be lower by using cryptocurrency or even avoided altogether, adding to the appeal.
Reasons to be Wary
With all of these reasons behind it you would think cryptocurrency would be the logical next step to replace other forms of payment. But there may be reasons to be wary of its use.
One reason to be cautious of using cryptocurrency as a means of payment is because of the wild changes in its value. Gold values, which are often still used as a comparison, have remained fairly steady over the past seven years. However, cryptocurrency, Bitcoin in particular, has seen values that have remained volatile over the same timeframe.
An additional reason to be cautious in the use of digital currency is legality. Not all countries yet recognize cryptocurrency as a means of payment for goods and services. The U.S., in fact, does not yet distinguish it as legal tender.
Cyber theft is another threat that could deter the widespread use of digital currency. Because cryptocurrency exists only in an intangible form on the internet it is vulnerable to theft by hackers.
Reportedly, some large corporations have used cryptocurrency to legally evade their taxes since the IRS does not recognize it as money. The IRS is trying to put a stop to this. But, as more businesses and citizens catch on to this loophole there could be further tax losses.
Some may fear cryptocurrency and others may embrace its use. But whether or not cryptocurrency will replace other forms of payment in the future is not yet clear. It is likely only time will tell.
