Is Fiat The Key to Crypto Mainstream Adoption?
How would you describe the relationship between fiat and cryptocurrency?
When one considers these two currency types, it becomes evident that at their base forms, they are both money – a means of value exchange. However, unlike fiat, cryptocurrency goes beyond the concept of just being a medium of exchange.
It offers a store of value that is decentralized and independent of any government authority. This feature is a source of attraction for those that wish to rid themselves of the influence of government-controlled currency. Since the introduction of the first cryptocurrency (Bitcoin) in 2009, these crypto enthusiasts have done everything to push crypto mainstream adoption.
Various limitations have impeded this effort — ranging from cybersecurity issues to price volatility and hazy regulations. However, irrespective of these problems, many crypto enthusiasts consider cryptocurrency superior to fiat.
Are they right?
They appear to have several compelling reasons for their argument.
Why is Cryptocurrency Better than Fiat?
A good number of crypto enthusiasts believe that cryptocurrency is better than fiat, citing the following reasons:
- Lower cost: Unlike fiat that incurs fees for the local banking services, cryptocurrency has no storage cost; it only charges a relatively low amount for transfers.
- Cross-border Capabilities: The value of cryptocurrencies is the same worldwide at any point in time. This ensures the ease of making international payments; however, this is not possible with fiat currency as it is regulated and limited to the borders of their respective countries.
- Flexibility: The decentralized nature of cryptos allows for more flexibility, and the development of a plethora of crypto-based applications is impossible with fiat.
- Limits Fraud: Blockchain technology is the foundation of cryptocurrency, making it almost impossible to create counterfeit cryptos. However, fiat currency, often in paper form, can easily be manipulated to produce counterfeits.
When one weighs the merits, it is pretty clear that crypto has the advantage.
In light of this, should fiat give way to crypto? Or could both fiat and cryptocurrency co-exist in a mutually beneficial manner?
Fiat is Not the Enemy
The movement to drive crypto to mainstream adoption has been cumbersome. In frustration, crypto experts and enthusiasts have hurriedly branded fiat as the villain of digital currencies and regard it as an ancient structure that needs to be torn down for cryptocurrency to thrive.
However, this position is myopic and not based on reality.
Fiat will not magically disappear, and every government on earth will not just adopt crypto. However, there is a different approach to this; the idea that crypto and fiat can actually exist together and that fiat can even act as a propeller that pushes digital currencies into the coveted realm of mainstream status.
This is already playing out in many fiat/crypto initiatives. For instance, the widely popular stablecoins (tied to fiat reserves) offer owners the best of both worlds; the quick and secure payment capabilities of digital currencies and the price stability of fiat.
Another good example comes from payment processors that support both fiat and crypto. These platforms make it easier for businesses to accept crypto payments through popular credit cards like Visa and MasterCard. By making cryptocurrency easy to use, these payment platforms will accelerate its adoption.
Catalyx’s Investor, TechX Acquires Mobilum
Mobilum is a fintech company that builds simplified but enhanced payment integrations for small and large businesses. These integrations allow crypto payments through debit and credit cards.
The acquisition of Mobilum by TechX would advance the deployment of accessible solutions for crypto/fiat while boosting overall transaction capacity. Furthermore, with few exchanges offering credit card payment avenues, Mobilum’s solution is a breath of fresh air as it will allow anyone to delve into crypto at their convenience.
This blog is for informational purposes only.
This does not imply or suggest investment in cryptocurrencies.
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