In the future, will fiat currencies be necessary in the world?

[bajingluncat]

if talking using hope might be true in the future fiat money will lose its role and be replaced immediately by crypto money just as a typewriter is replaced by a computer, it sounds easy to see once it's crypto money in the world and many countries have acknowledged its existence, but if we look from the social and cultural side will be difficult especially for ordinary people, or those who are not technologically literate will be very clashed, especially for countries that are less economically advanced, it will need hard work, because this is a big change that will change and have a big impact on economy

[Flor1982]

For now it is really necessary because we will not survive if we will not rely on it except if another currency will supersede the fiat in the future like the Crypto currency then of course fiat will no longer be necessary but this is very far from reality right now because we need more improvements to make in order for fiat to become obsolete.

[BlueStackz]

in the future, will there really be a need for fiat currency? Government can collect taxes in crypto, determine how to allocate it, and spend it in crypto. Ppl can receive salaries and do all commerce using crypto. Loans can be done in crypto. Fundraising can be in crypto. Sure, problems have to be worked out in terms of scalability, does it have to be completely decentralized, etc, the value has to become more stable. But theoretically, is there any reason to have fiat in the future?

It has been established that governments can now do taxation without representation by printing more money (which is a tax on everyone holding the currency), instead of trying to get a bill passed that allows it to increase the tax rate. With crypto this would be no more. All increased taxation would have to pass a vote.

From an economic standpoint, the idea that a country can stimulate its economy by adjusting interest rates is tenuous. There is just as strong an argument that lowering interest rates has caused speculation and bubbles, with calamitous results. In a crypto market economy, capital will flow from where it is needed less to where it is needed more.

Those of you saying that fiat is not necessary doesn’t know what they’re saying unlike cryptocurrencies fiat can be used physically and this makes it very easy for it circulate properly, you can easily give money to a beggar by the street, but if it was with cryptocurrency beggars will need to get a same phone to be able to receive the coin you’re giving to them, and tell me…

Are you ready to stop and start bitcoin to beggar and wasting your time in the process? And by the way, who would agree to give money to a beggar holding smartphone or carrying a computer? Lol. Maybe you should try going to the market and trying to do trade by barter since you think fiat is not necessary.

[KingdomHearts]

Only the best fiat money for cryptocurrency, without fiat money will be difficult for cryptocurrency to become legitimate in the world, because there are some countries that still prohibit cryotocurrency from replacing payments, so I think fiat money will continue to be needed in the future.

Even in the long run, except in the case where some generations just get wiped off, fiat will still always remain. Just as bithodler mentioned above, a lot of people are so convenient in their comfort zones, that they would still prefer to remain in fiat any which way.

Over time, things may change though as a result of acceptance and adoption of the digital world, but there are so many factors which also includes the government centralized factor most importantly in the whole equation.

[Hell-raiser]

in the future, will there really be a need for fiat currency? Government can collect taxes in crypto, determine how to allocate it, and spend it in crypto. Ppl can receive salaries and do all commerce using crypto. Loans can be done in crypto. Fundraising can be in crypto. Sure, problems have to be worked out in terms of scalability, does it have to be completely decentralized, etc, the value has to become more stable. But theoretically, is there any reason to have fiat in the future?

It has been established that governments can now do taxation without representation by printing more money (which is a tax on everyone holding the currency), instead of trying to get a bill passed that allows it to increase the tax rate. With crypto this would be no more. All increased taxation would have to pass a vote.

From an economic standpoint, the idea that a country can stimulate its economy by adjusting interest rates is tenuous. There is just as strong an argument that lowering interest rates has caused speculation and bubbles, with calamitous results. In a crypto market economy, capital will flow from where it is needed less to where it is needed more.

What you're proposing is essentially a government controlled crypto, where they are able to keep an eye on the network in order to manage taxation better, introduce monetary policy more directly, etc. etc. It's definitely something that is foreseeable.

In that case, wouldn't it still be a fiat currency, as there isn't a limited supply and still controlled by a government? It's just in a different form. Not in paper, but on the blockchain.

Fiat is definitely not necessary for the economy to function. I mean, humans did not start using fiat until a few centuries ago, and before that, commodity based currencies are used and there were much less economic crises, in fact. A bitcoin based economy wouldn't be impossible at all. However, governments round the world will push their currency and try to back the value of their own currencies, regardless of what progress crypto adoption has made.

As much as I agree with the first part of your post about a governmentally controlled crypto being just another form of fiat (since this is what I have been saying here for years myself), I as much disagree with the second part of it where you claim that the economy doesn't need fiat. It was the case a few centuries ago when, as you correctly noted, commodity-based currencies had been used universally. Actually, they were based on precious metals (mostly silver if we are talking about Europe), but this is irrelevant to the point in question. In the simplest of terms, economies didn't switch to fiat currencies just for kicks. In fact, it was inevitable, kind of objective necessity if you please. Hard currencies were an insurmountable obstacle to a steady economic growth, so no surprise that such currencies were completely abandoned eventually.

In other words, the modern global economy, given its complexity and the level of interdependency between its parts, simply cannot function on hard currencies as they will wreak havoc in financial settlements throughout the world if we assume for a moment they get introduced again.

[7Dyoknga5]

It is true that a lot of transactions today can be made online and without having tangible money.

But do all people find transacting online easy? Or do all people have internet? Fiat money tends to cater all individual who can't have these type of options to transact.

[ulhaq]

A lot of good points. Many have said that fiat is necessary now. Well, obviously, the question was whether fiat would be necessary in the future.

Fiat has been tested for how long period of time,while virtual money was just here for only 10-15 years so please never compared the two because they are two different thing that has single purpose and that is to serve the people

Fiat has not been tested for a long period of time, maybe 75 years total. Before that it was gold or gold-backed currencies.

This discussion has been coming up everywhere recently. Although,I do not support the phasing out of the Fiat currency, I can't really find a point to back its existence. But I still think it's asking too much. Even if cryptocurrencies would replace Fiat, it would take a lot of time. But before than happens, some things must be taken care of. Take for example the volatility of cryptocurrencies. Such variable makes it too difficult to be made a major means of exchange. This is only one of the issues that I have in mind.

Volatility is not an issue, the volatility has been going down every year and will continue to do so.

Given the risks involved, l don't see a total switch to digital money anytime soon. Besides, an increasing acceptance of digital money comes with some compromises. The government in South Korea demanded that crypto accounts not be anonymous, but use actual name. This will facilitate taxation, and trace corruption. These and a number of measures will be taken by governments around the world. Besides, do you see the internet connectivity rate being 100% all around the world? What of those places without access, how do they functions?

This is a good point.

If crytpo is decentralized, and if all the governments use it, doesn't it mean, all economies are one? 

No, all economies are not one, because governments will have different overall tax rates, will tax different things (income tax vs. corporate tax vs. sales tax), have different deductions, different agreements with each other for mutual taxation, will decide to spend the money on different purposes, etc.

Hey! What you are saying it is great, but what is the reason for such a switch? I don't think that governments are ready to work with crypto instead of fiat money. Moreover, fiat money give them several tools to manage economics. For example, interest rates, money supply etc. By increasing the emission, by lowering rates or by QE programms, central banks stimulate business activity. I can't see such a possibility when using Bitcoin, for example, as the emission is limited and the very crypto is out of reach for central banks

I don't see that any of those tools work to manage economies. By changing interest rates and the money supply, ostensibly to "stimulate" the economy, governments have created massive bubbles with catastrophic results. The thinking is that consumer demand for products needs to be increased during a recession. But most of the products people buy are junked within a few years and the individual has nothing to show for it, while savings rates are very low. It is nothing more than a transfer of wealth from poor/middle-class to corporations. How does that benefit the economy? Also the money that is spent to "stimulate" the economy is money that could have been spent elsewhere - eg, infrastructure, education. So I would say that direct money spent has had the effect of enervating the economy by diverting it from more productive use.


At least 2 good points - difficulty in in-person, small, retail transactions, and internet connectivity issues. But even these are potentially solvable in the future. The technology to collect crypto could become so cheap that even small retailers and stalls could accept crypto, also internet connectivity improves all the time, maybe there will even be backup internet connections available at some point. But even so, it is good to have fiat as a backup currency.

[ulhaq]

A lot of posts saying that the older generation is not savvy, do not understand crypto, or do not like it. Come up, look at the technical sophistication of millenials. In 50 years are there really going to be people who are Luddites?

What you're proposing is essentially a government controlled crypto, where they are able to keep an eye on the network in order to manage taxation better, introduce monetary policy more directly, etc. etc. It's definitely something that is foreseeable.

In that case, wouldn't it still be a fiat currency, as there isn't a limited supply and still controlled by a government? It's just in a different form. Not in paper, but on the blockchain.

I meant for the government to use a third-party crypto like bitcoin, eg. So it would not be controlled by the government, except that they could compel citizens to pay their taxes in it, enforce collection, etc.

Those of you saying that fiat is not necessary doesn’t know what they’re saying unlike cryptocurrencies fiat can be used physically and this makes it very easy for it circulate properly, you can easily give money to a beggar by the street, but if it was with cryptocurrency beggars will need to get a same phone to be able to receive the coin you’re giving to them, and tell me…

Are you ready to stop and start bitcoin to beggar and wasting your time in the process? And by the way, who would agree to give money to a beggar holding smartphone or carrying a computer? Lol. Maybe you should try going to the market and trying to do trade by barter since you think fiat is not necessary.

I read an article recently about how tips have been decimated by digital payments, and persons like bellhops who were receiving cash tips have started accepting digital tips because so many people just don't carry cash anymore.

The price of old smartphones and with technology prices coming down and the quality going up, and crypto wallets becoming ubiquitous and easy to use, yes, it is conceivable that even beggars could accept digital payments. If you could go down the street and use it to buy food or water, then why not accept it as crypto?

As much as I agree with the first part of your post about a governmentally controlled crypto being just another form of fiat (since this is what I have been saying here for years myself), I as much disagree with the second part of it where you claim that the economy doesn't need fiat. It was the case a few centuries ago when, as you correctly noted, commodity-based currencies had been used universally. Actually, they were based on precious metals (mostly silver if we are talking about Europe), but this is irrelevant to the point in question. In the simplest of terms, economies didn't switch to fiat currencies just for kicks. In fact, it was inevitable, kind of objective necessity if you please. Hard currencies were an insurmountable obstacle to a steady economic growth, so no surprise that such currencies were completely abandoned eventually.

In other words, the modern global economy, given its complexity and the level of interdependency between its parts, simply cannot function on hard currencies as they will wreak havoc in financial settlements throughout the world if we assume for a moment they get introduced again.

Let's set things straight. It had already been tried and didn't work (with gold as money). Any deflationary currency (gold, bitcoin, whatever) would be massively taxing real economy. People who have a lot of tokens representing money would be profiting from just holding them, that is by doing nothing, from people who actually create goods and services, bringing value to the table. Fiat is not perfect but what it is perfect at is taking from idlers a competitive advantage which they otherwise would have just because they happen to be rich.

There is nothing wrong with using a deflationary currency such as gold. The reason why governments moved away from gold is not because it wasn't working. There were 2 issues. Because they needed to buy it on the open market, they could not maintain adequate reserves for what they wanted to spend on, and they had to pay debts with the value that was borrowed. By moving to fiat currencies, they could tax the populace by printing more currency, hence more for whatever spending they wanted to do, and secondly, they could inflate away the value of debts.

Inflation or deflation is only bad if it is unpredictable. Any argument made against deflation can be made against inflation. Why would one borrow money if they would have to pay back more in the future (argument against deflation). Why would one lend money when they are going to get back less in the future (argument against inflation). Why would one buy goods and services when they know they can get it cheaper in the future? If prices are going down because the value of the currency is going up, then one is still transferring the same value to the seller at a lower price. Why would a seller sell a good or service now, when they can sell it in the future for more dollars? 

But besides that, crypto does not have to be deflationary. Ether is inflationary.

[fuding12]

Well, before I never thought about the future of fiat currencies that might become obsolete. But, until I found an article entitled:

"Fiat Currency Will Be Laughable in Five Years Says Billionaire Team Draper"

Link: https://cointelegraph.com/news/fiat-currency-will-be-laughable-in-five-years-says-billionaire-tim-draper

In the article, Draper explains how fiat has limitations, the same limitations that really begin to interfere with the progressive and advanced thinking global population.

And I agree with Tim Draper's statement.

[senin]

in the future, will there really be a need for fiat currency? Government can collect taxes in crypto, determine how to allocate it, and spend it in crypto. Ppl can receive salaries and do all commerce using crypto. Loans can be done in crypto. Fundraising can be in crypto. Sure, problems have to be worked out in terms of scalability, does it have to be completely decentralized, etc, the value has to become more stable. But theoretically, is there any reason to have fiat in the future?

It has been established that governments can now do taxation without representation by printing more money (which is a tax on everyone holding the currency), instead of trying to get a bill passed that allows it to increase the tax rate. With crypto this would be no more. All increased taxation would have to pass a vote.

From an economic standpoint, the idea that a country can stimulate its economy by adjusting interest rates is tenuous. There is just as strong an argument that lowering interest rates has caused speculation and bubbles, with calamitous results. In a crypto market economy, capital will flow from where it is needed less to where it is needed more.

Any decentralized crypto currency is alien to any state, because it is in no way connected with the economy of any state. Even from this point of view, states will never switch to the use of decentralized crypto currency in their calculations. In addition, decentralized crypto currency has a very high volatility and even if the government bodies decided to switch to settlements in the decentralized crypto currency, it is practically impossible. Collect taxes in the crypto currency in some cases it is possible, but no one will decide to give out loans in it because of the very high risk.

[Kris34]

I think it would be better if there was one currency in the world that is not regulated by any country, but only by a group of competent people.

[St4yInTh3D4rk]

Having fiat currency is not necessary for now because we can use cryptos anywhere in the world if the place has internet but still there are lot of places without interent so those place can't access the cryptos where the fiat are necessary.But fiat getting more and more burden to our life everyday because of inflation and more taxes by the governments if we have a decentralized entity as a currency then no one enforce us to pay lot of taxes.

[erominer]

yes just like the gold times during the old days, remember gold is valuable up to now and let us not forget the fact that there is still a lot of countries or part of countries that don't have electricity.

[Yramesor0]

Fiat currencies are important to every country and the whole world. Not all areas around the globe can enjoy using crypto as a medium of exchange since not all are countries are having advanced technologies. Cryptocurrencies can only be accessed if have the electricity and internet connections. So to those areas having none, then crypto is useless unlike fiat money as long as you have it in your hands with or with electricity and internet connections you can use it anytime and anywhere.

[arrmia11]

Of course it would still be necessary in the world. From the first place, for how many decades, we are using fiats for day to day transactions. You cannot eliminate that right away even though the possibilities of crypto in economy is high. There are benefits of crypto and the same with fiat. We can use both of them for our everyday life.

[shadyrifles]

We the humans are getting more dependent on technology day by day. The day will come when people will start using digital money and fiat currency will be unnecessary piece paper in this world.

[Zooplus]

Of course it would still be necessary in the world. From the first place, for how many decades, we are using fiats for day to day transactions. You cannot eliminate that right away even though the possibilities of crypto in economy is high. There are benefits of crypto and the same with fiat. We can use both of them for our everyday life.

Right.Fiat currencies are still very beneficial to the majority of the people nowadays since they are still using it to buy their goods and pay for services.Maybe in the future it will be less necessary when most of the people are exposed already in using cryptocurrencies.I think it will only happen once the government decides to accept cryptos and legalized its usage.

[arsenti]

A lot of good points. Many have said that fiat is necessary now. Well, obviously, the question was whether fiat would be necessary in the future.

Fiat has been tested for how long period of time,while virtual money was just here for only 10-15 years so please never compared the two because they are two different thing that has single purpose and that is to serve the people

Fiat has not been tested for a long period of time, maybe 75 years total. Before that it was gold or gold-backed currencies.

This discussion has been coming up everywhere recently. Although,I do not support the phasing out of the Fiat currency, I can't really find a point to back its existence. But I still think it's asking too much. Even if cryptocurrencies would replace Fiat, it would take a lot of time. But before than happens, some things must be taken care of. Take for example the volatility of cryptocurrencies. Such variable makes it too difficult to be made a major means of exchange. This is only one of the issues that I have in mind.

Volatility is not an issue, the volatility has been going down every year and will continue to do so.

Given the risks involved, l don't see a total switch to digital money anytime soon. Besides, an increasing acceptance of digital money comes with some compromises. The government in South Korea demanded that crypto accounts not be anonymous, but use actual name. This will facilitate taxation, and trace corruption. These and a number of measures will be taken by governments around the world. Besides, do you see the internet connectivity rate being 100% all around the world? What of those places without access, how do they functions?

This is a good point.

If crytpo is decentralized, and if all the governments use it, doesn't it mean, all economies are one? 

No, all economies are not one, because governments will have different overall tax rates, will tax different things (income tax vs. corporate tax vs. sales tax), have different deductions, different agreements with each other for mutual taxation, will decide to spend the money on different purposes, etc.

Hey! What you are saying it is great, but what is the reason for such a switch? I don't think that governments are ready to work with crypto instead of fiat money. Moreover, fiat money give them several tools to manage economics. For example, interest rates, money supply etc. By increasing the emission, by lowering rates or by QE programms, central banks stimulate business activity. I can't see such a possibility when using Bitcoin, for example, as the emission is limited and the very crypto is out of reach for central banks

I don't see that any of those tools work to manage economies. By changing interest rates and the money supply, ostensibly to "stimulate" the economy, governments have created massive bubbles with catastrophic results. The thinking is that consumer demand for products needs to be increased during a recession. But most of the products people buy are junked within a few years and the individual has nothing to show for it, while savings rates are very low. It is nothing more than a transfer of wealth from poor/middle-class to corporations. How does that benefit the economy? Also the money that is spent to "stimulate" the economy is money that could have been spent elsewhere - eg, infrastructure, education. So I would say that direct money spent has had the effect of enervating the economy by diverting it from more productive use.


At least 2 good points - difficulty in in-person, small, retail transactions, and internet connectivity issues. But even these are potentially solvable in the future. The technology to collect crypto could become so cheap that even small retailers and stalls could accept crypto, also internet connectivity improves all the time, maybe there will even be backup internet connections available at some point. But even so, it is good to have fiat as a backup currency.

Very well put together, some arguments make sense but if you look at the pace of technology, in a few years every retailer probably will have a manchine (Pundix?) that converts any crypto to a currency of they acceptance, people will have embraced crypto currency a lot more and use for commerce, at least there is a high degree of probability.

I see another concern from a different direction, most of us typing here live in so called privileged countries, not only do we have fresh water, but also electricity and even high tech such as smart phones...however we are in the minority. Large parts of the planet does not have these luxuries, not even clean drinking water or sanitary installations. 

[Sled]

They are necessary in the world to have a fiat currencies because even the cryptocurrencies are not existing, it is the main currency that is being used and with the fiat currencies, the flow of the money is being centralized and well controlled by the government but i think that in the future, it will not be necessary anymore because the technology will take over the fiat currencies.

[hachiman13]

We focus too much on what crypto can do but not what it can't do. Sure, it can do all sort of things fiat can't but the implementation will be sureal. Take note that not all people are technologically inclined especially in the poorer countries so using fiat is be better for them.