It is no secret that the banking community have been trying to move away from physical currency for many years, but, Deutsche Bank has made a startling prediction that cryptocurrency will replace fiat currency. Not only are the predicting that cryptocurrency will replace fat currency altogether but the have put a very short time frame on it – a decade.

Let’s scrutinise the claims a little closer in order to see how much merit we should give them.

Digital Currency Over Physical Currency

Central banks the world over are trying to move away from actual cash in wallets and move to a greener and financially leaner digital currency system. This has manifested in several ways including Apple Pay, card-less payments and improved card payment options like touch pay cards.

This has coincided with a general reduction of cash machines and the idea has been to get people used to not paying with cash. Cryptocurrency comes into the digital vs physical currency solution as the major barrier to entry is merchant costs for transactions.

Have you ever heard a retailer say they don’t accept AMEX because their fees are too high? Well the truth is, card payments aren’t cheap and the verification process required to ensure payment goes from one account to the next is fraught with difficulties.

Cryptos like Ripple have been designed to specifically facilitate payments with very little cost to those who use the Ripple protocol.

Cryptocurrency Over Fiat

This one is interesting because fiat currency is controlled by central banks which are then in turn controlled by the government and they are monitored to ensure that economic outlook is as positive as possible.

So, this statement either supposes that governments are going to surrender the control of their own economic outlook or it means that governments will seek to create their own respective cryptocurrencies which will then be equally controllable as a fiat alternative.

I can’t see the US government scrapping the US Dollar in favour of everyone using Bitcoin – can you?

Next Decade

While I agree in principle that banking and currency will undergo changes over the next 10 years, perhaps the most incredible aspect about the Deutsche Bank statement is the time frame.

I concede that currency will likely become a digital (even wholly digital) entity over the next ten years, I remain sceptical that cryptocurrency will replace fiat currency in this time.

Here is why;

• Lack of understanding by governments – many of which are still unsure how to monitor, regulate and legislate for crypto. To go from that to developing government approved cryptocurrency seems a stretch to say the least.
• Public perception – the general public remain unconvinced about cryptocurrency and there are continual (oftentimes wrong) depictions about cryptocurrency including volatility and that it is a scam. For any currency to be used, people have to place value in it.

What do you think? Do you think cryptocurrency will replace fiat currency in the next decade? Or is this statement the kind of unrealistic hype that cryptocurrency could do without?