With more and more cryptocurrencies being introduced since the last decade, the flaws in the other conventional assets are being reduced one by one.
Analysing Dollar Value and other Fiat Money
Some of the beneficial points that are worth mentioning about Bitcoins, which make it unique from its counterparts include:
- Complete elimination of a centralized control over the fiat currency and assets. For example minimising the role of the government and the influential lot
- Reduction in the rate of inflation in cryptocurrencies, as compared to the steep inflations and deflations created in the market due to USD and gold
- Removal of corrupt source such as those from the hands of influential and powerful people who are able to manipulate the value of gold and dollar in different economic times
Here is a list of reasons how gold came into existence and later turned out to be one of the most valued assets:
- Gold is useful not only as an asset but also as an ornamental object and as a prestige item
- It is a heavy asset and hence a divisible asset
- It is resilient
However, here is a look at why Bitcoins could slowly replace gold:
- In this world of digitalisation, the physicality of gold prevents it from being connected with technology. However, on the other hand, Bitcoins are a by-product of technology.
- Gold cannot reform itself to meet the needs of technology. On the contrary, Bitcoins are transparent and decentralized, therefore it can be easily connected with technology and its growing needs.
- Another example worth mentioning is that you cannot transport gold instantly from one place to another or from one individual to another without the reliance on some sort of central authority to release gold based on demand at different locations. However, this proves to be a hassle. Bitcoins on the other hand, can be transferred from one place to another almost instantaneously through the Blockchain network.
- Although the uses of gold are increasing, it cannot be produced efficiently. However, Bitcoins are highly divisible, even to the smallest fraction.
Overall, it can be concluded that Bitcoins and alternative digital currencies will become the future legal currency regulated by the government itself. This is because Bitcoins and other cryptocurrencies will overcome the flaws that are depicted in the fiat money and in gold, as an asset. The ability of Bitcoins to be digitised is what will be the contributing factor to its success in the future.