Thomas Frey predicts that crypto currencies will replace parts of FIAT currencies by 2030. In his opinion, about 25 percent of national FIAT currencies will be replaced by crypto currencies by 2030. Above all, he refers to the fact that Bitcoin & Co. are much more efficient. My first thought was whether he might actually be right and that these statements are bold. But we already reported this week about the introduction of the first legal crypto currency – Sovereign Token – on the Marshall Islands.
Bitcoin really legitimate?
Dr. James Canton of the Institute for Global Futures agrees with the statement and underlines once again that we have witnessed the emergence of a completely new form of asset class in recent years. Wall Street has also helped legitimize crypto currencies by integrating them into the existing financial system through the introduction of Bitcoin futures. Even governments unconsciously contributed to Bitcoin being seen as a legitimate form of asset. Bitcoin has been confiscated from time to time in recent years in various cases of fraud and insolvency, so even governments believe that Bitcoin and other crypto currencies are a form of wealth. In Russia, on the other hand, crypto currencies cannot yet be confiscated because the state has not yet granted digital money any legitimacy.
The volatility problem
Bitcoin’s critics will definitely refer to the extreme volatility of crypto currencies. One should not forget, however, that FIAT currencies can also show strong fluctuations, such as the decoupling of the Swiss franc. Bitcoin & Co. are so volatile at the moment, because this market is still relatively new & small and not yet really much capital, in relation to the foreign exchange market, is. With increasing acceptance the fluctuations will also stabilize in the long run. Of course, the market must achieve capitalisation for the first time, in which individual major investors cannot achieve anything on the price when buying or selling. At the moment this is still much too low to be considered as a stable currency.
It may well be possible that Bitcoin will replace some of the FIAT currencies. Especially for smaller countries such as the Marshall Islands or Venezuela, crypto currencies may become relevant as legal tender.