How Cryptocurrencies could overtake fiat currencies in the future.

Right from the days of trade by barter, the acceptable means of exchange for transactions have been constantly evolving. People have always looked for more general, easier, and better ways to carry out transactions.

It started from exchanging one item for another, to accepting certain items such as salt or animal skin, and today, we have both physical and digital currencies. While the physical (fiat) currencies are tangible in form of coins and papers, digital currencies known as cryptocurrencies are intangible.

Due to its technological advantages, there have been speculations on whether cryptocurrencies could overtake fiat currencies in the future. In this article, we will consider the possibilities of the cryptocurrencies to overtake fiat and its possible effects on the world of finance.

Possible Reasons Why Cryptocurrencies Will Overtake Fiat Currencies

Since its introduction in 2009, many people have considered crypto as the future of money. Of course, this notion has been reflected in the increasing acceptance of crypto as a legal means of exchange in different financial quarters.

For instance, top companies such as Tesla, Square Inc, and MicroStrategy have all incorporated Bitcoin as part of their acceptable means of payment. And even more convincing now, the tide is turning to the governments of countries.

The first nation to adopt crypto as an official means of transaction is El-Salvador. Although they remain the only nation so far, other countries have shown positive signs too. The United States, for instance, has not officially legalized its use, but has been providing guides for crypto and even somehow captures it under the Bank Secrecy Act.

As a digital currency, crypto seems to have certain advantages over fiat currencies. These benefits are the major reasons why many people suggest that it will only take time before cryptocurrencies fully overtake the financial world. Some of these reasons include:

Decentralized Financial System

Decentralized Finance (DeFi) means that the currencies are not under the strict control of the government or some particular exchange authorities. Although crypto maintains similar transactional functionalities with Fiat, they are built and operate on Blockchain technology and are entirely decentralized.

In a DeFi system, transactions and operations flow directly between participants. There are no central intermediaries such as central banks, brokerages, or exchanges to directly control the participation or distribution of currencies.

Intermediaries such as banks or brokers can stop, pause, or delay transactions. They can also introduce transactional fees and other regulations. Eliminating these intermediaries reduces the costs and increases the speed of transactions using cryptocurrencies.


Transactions done via fiat currencies are recorded with the central bodies in charge, such as central banks. These bodies maintain the “approved” copy of the records such that any transaction record will have to be cross-checked with theirs to prove authenticity.

Also, anybody who gains access to the records on the central server can tamper with transaction records. This makes it less safe than blockchain records.

With cryptocurrencies, the records of transactions are stored in blocks and these blocks are interconnected. This implies that before you can tamper with a particular record, you would have to gain access to all other blocks that are connected to it. Of course, this provides an added layer of security to make the records more secure.


One of the major criticisms against cryptocurrencies is the high volatility of the currencies. This means that their prices and value change quite too regularly, and this is not healthy for the stability of an economy.

More critical is the fact the reasons for the swing in prices may not even be tangible enough. For instance, one tweet from financial giants such as Elon Musk can swing the crypto market in an opposite direction.

But the introduction of stablecoins has become an effective way to counter this volatility issue. Stablecoins such as USDT are mimics of fiat currencies and are pegged at the prices of fiat currencies. So, unlike other coins, their prices do not change, and this helps to create stability in the cryptocurrency ecosystem.

Wider Scope of Transactions

Different countries and regions have different fiat currencies that are acceptable in the place. That means you cannot perform any transaction in a place unless you have the currency that works there. For instance, you must convert your British Pounds to US Dollars if you move from England to the US to be able to make any transaction.

This limitation exists even with online transactions. If you’re in some parts of Africa, for instance, you may have to get some special kind of account to be able to process online payments in USD.

Cryptocurrencies totally eliminate these constraints. Bitcoin is Bitcoin, whether in Europe or Asia. You can perform your transactions without going through the stress and cost of currency exchanges.

Possible Concerns About Cryptocurrencies Taking Over Fiat

Market Fluctuations

As mentioned earlier, the prices and values of crypto coins are very volatile. Although stable coins seem to help curtail this challenge, many other coins are volatile enough to keep the crypto market volatile. High volatility is not healthy for an economy as it makes the financial market more unpredictable.


People are always very quick to point out that decentralization makes the crypto market harder to control by one force. But in recent times, crypto trends seem to prove otherwise. The operations of “crypto big dogs” still have a great influence on the behavior of the market.

For instance, just a single tweet from Elon Musk to announce that his company now accepts a coin is enough to make the price of that coin skyrocket to the moon. Many people think that this is even worse than fiat currencies because it will be harder for just one person to muster such a level of influence on fiat.

Electronic Transactions Only

Another worry at the moment about crypto taking over the market is that dealing with crypto requires good technical know-how. So, what happens to countries and people who are not yet technologically intelligent?

How about remote places that don’t yet have a stable internet network or even stable electricity supply? If you replace physical currencies with only online alternatives in such places, it will most likely do more harm than good to their economy.

Irreversible Transactions

As with most banks, you may have the opportunity to retrieve or cancel a transaction in the event of any mistake. For instance, if you mistakenly send money to the wrong account number, your bank might possibly be able to reverse the transaction and retrieve your money.

With cryptocurrencies, the reverse is the case. There’s no particular body managing your transactions. And, there is no concise way of tracing a crypto account through the wallet ID. So, if you make any mistake in any transaction, it becomes irreversible and you lose your money.

Lack of Control and Regulations

One of the strongest arguments against decentralized finance is that it is easier to defraud people. Fiat currency transactions are easier to trace because the records are kept and managed by central regulatory bodies. This makes it easier to detect fraud and prosecute scammers.

But with a decentralized system, no one is specifically in charge and so, it is easier for scammers to manipulate gullible people on their platforms.

The Future of Crypto

Whether Cryptocurrencies will eventually take over fiat entirely is still not certain at the moment. However, the future of crypto in world finance seems to get brighter with each passing day.

The acceptance and usage of cryptocurrencies are increasing day by day. More and more companies and countries are considering and supporting crypto in one way or the other. And with the way the world is tending towards a cashless economy, crypto might eventually dominate the finance space.


The fact that online financial transactions are now more preferred than traditional means gives cryptocurrencies an edge over fiat currencies. However, cryptocurrencies might not necessarily eliminate fiat currencies. Rather, they might work together to create a more seamless economy.

Also read What are ETFs?