I recently had a discussion with some peers about the future of bitcoin and how it could be adopted as a ‘world currency’. An interesting point was raised about the adoption of the blockchain based currency and how it could be integrated to replace existing fiat currencies.
The point raised during the discussion was whether bitcoin could be used and stored as a ‘physical’ item like a bank note? Most ardent supporters of bitcoin would think of this use case as blasphemous given the revolutionary adoption of the blockchain and its position as a digital currency.
At present fiat currencies are closely controlled through government intervention. The potential problem with bitcoin is what methods can be put in place to help it reach an ‘equilibrium’ value to allow for stable transaction value. For most, trying to replace whilst also in some ways replicate the system we currently use is a fruitless exercise. In my opinion, all physical forms of currency are on their last legs.
There is a considerable concern around using the semi-anonymous bitcoin as a currency due to money laundering and financing of terrorism issues. Considering cash within established nation-state monetary systems has existed with this issue for many years, I think the concern may be overstated.
What is more integral to a digital currency creating a ‘cashless’ society is that of a universally accepted system or policy. The system would be accepted by all nation states and would include a complete Anti-Money Laundering and Counter-Terrorism Funding policy. I believe this would be safer than the current system already employed as all funds on a blockchain are completely trackable. As I have alluded to in other articles, the question would then be how much information the general public would be willing to allow the Government to access around their cryptocurrency usage, and whether this would impact or erode the benefits of using a currency such as bitcoin in the first place.
Another positive of utilizing digital currency is the cost saving garnered by cutting out physical manufacturing and design processes when printing money. Furthermore, through the use of blockchain, we can lower preventative costs as one can eliminate physical duplication fraud of banknotes or coins.
If cash is eliminated what would our everyday transactions look like?
I believe it would be not too different to what is already occurring; however, in place of a debit card or ‘paywave’ type setup, we will have a small wearable hardware wallet. This wallet would possibly be integrated with other services such as identification and medical details (which could also be stored on a blockchain!).
We will know we have entered a new phase when we are tipping BTC at a restaurant instead of leaving small change.
Imagine opening your wallet and pulling out a 0.1 BTC note. was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.