There has been a lot of talk regarding the digitization of money in the past few months. Those plans became even more viable once the announcement was made by Safe.Cash regarding the digital Euro tokens coming our way in 2016. Bitcoin offers a lot of potential to be used as an activist tool, but will these digital fiat currencies offer the same functionality?
The Main Issue With Fiat Currency and Central Authorities
Whenever a new movement gets mainstream media attention and traditional currencies are involved, it is only a matter of time until bad things happen. Take a look at Wikileaks, for example, a platform that exposed a lot of secrets. This approach wasn’t appreciated by most governments around the world, and investigative journalism started taking a backseat due to this negative attitude.
Additionally, Wikileaks accepted donations through traditional means and it didn’t take long for both Visa and Mastercard to cut off that revenue stream. In most cases, these companies would need a court order to do so, but somehow, they got away with it as far as Wikileaks was concerned.
To fight that injustice, Wikileaks started accepting Bitcoin donations instead. The choice for Bitcoin was rather simple: a borderless digital currency outside of the control of central authorities and governments. At the same time, Wikileaks gave Bitcoin a popularity boost, which was direly needed at that time.
Money, in both the traditional sense, should offer the ability to secure purchase power for the basic needs of life. However, there is enough money in circulation to make life comfortable for everyone, yet it is divided unfairly. The people who need money the most are the ones who have nothing, and those who don’t need it control 90% of the monetary supply.
Even though cash will not be replaced any time soon, society is evolving towards a cashless nature. More and more places around the world stopped accepting cash payments, and card payments are the only remaining option. But using a plastic card for payments allows consumer data to be harvested, and sold to third-party advertisers.
Should push come to shove, and cash becomes obsolete in the not-so-distant future, there are only two viable options for making payments. Either consumers will be stuck with the banking system they all know and despise, or they will flock to digital currencies like Bitcoin. In the end, financial freedom and cross-border peer-to-peer payments will win out, which is not something banks can offer [right now].
Digitizing fiat currency poses a lot of risks, as this form of payment – just like credit and debit cards- were never intended to be used in a digital world. In fact, digital currencies are the only decent option to send and receive payments in the digital age. However, up until this point, Bitcoin can not be used to pay for just anything.
Decentralized Digital Currencies To Take Over?
Regardless of how the consumer feels about digital currencies like Bitcoin, centralized payment solutions need to be revamped or shut down completely. Whenever popular payment solutions like Paypal can be shut down in certain countries, things are going from bad to worse. Money is designed to flow freely within and outside of country borders, yet governments and central banks are doing everything they can to enforce capital controls.
Banks are not too keen on embracing Bitcoin, as it is direct competition for their own business model. Yet the underlying blockchain technology is of great interest to financial institutions all over the world. While one can have the blockchain without Bitcoin, it is only a matter of time until the digital currency co-exists with fiat currency on a global scale.
Source: Reinvent.Money 2015
Images courtesy of Shutterstock, Wikileaks
Also published on Medium.