This new global monetary system where bitcoin will act as the rails of the financial system is magnitudes more efficient than all current fiat systems. This will create a lower transaction cost when compared to any fiat money today, and will be the foothold that digital currencies will take to win out economically over fiat money in the long run.
When banks and financial service companies will be able to use cryptocurrencies they will cause two other actions to happen simultaneously:
- The legitimization of bitcoin and other digital currencies as a global money.
- Exposing the legacy financial system to speculative attacks from the cryptocurrency economy, ultimately leading to a devaluation of fiat money against bitcoin and other cryptocurrencies as fiat money is displaced.
Bitcoin and digital currencies will always be a cheaper monetary systems to maintain and utilize than a fiat money, partially when we consider the cost of scaling and security over the long-term, and on a global scale. Due to the unique construction of digital currencies from a security stand point, digital currencies create nearly perfectly secure money systems . Out of the box, through cryptographic functionalities built directly into digital currency protocols; they are magnitudes more secure, efficient, and scalable than fiat money. Fiat money must be defended from counter-fitting, banking fraud, note destruction, and physical theft. Fiat money will always be more expensive to service, use, and maintain as a whole monetary system than any kind of digital currency system because of those weaknesses and flaws. Digital currencies have greater security and scalability than their fiat counterparts as well.
The crisis of fiat money will change not only finance and banking for the better, but the nature of governance as we know it. Bitcoin is going to be a trojan horse to the fiat banking system, and will destroy all government monopolies on this issuance of money. While bitcoin will be able to act as a check on the economic power of governments, in doing so it is also going to expose bitcoin to rigorous state regulations, and ultimately the full capturing of bitcoin as a whole system. Bitcoin may end the state’s control of money, but it may also open the path to the state’s ability to watch all financial transactions.
Over the next decade we are going to see one of the greatest transference of wealth the world has ever seen, and it will be from the failure of fiat money the coming economic hegemony of digital currencies.
