Cryptocurrencies can become the main form of payment within the next 10 years. This conclusion is contained in a study presented by the companies Imperial and eToro, called “Cryptocurrencies: overcoming barriers to trust and acceptance.” Researchers argue that the cryptocurrency is already performing one of the three main functions of money: is a means of accumulation and saving. After all, most of those who bought a cryptocurrency does not perform other operations with it – they only store it.
However, in order to become a full monetary unit, the cryptocurrency must start to fulfill two other obligatory functions of money. The researchers state that it needs to become a mean of exchange and start to fulfill the role of a unit of account. In other words, it must act as a measure of value in the economic system.
It would seem that researchers have discovered nothing fundamentally new. It is because of the shortcomings that most countries of the world refuse to recognize the cryptocurrency as money, i.e., the usual means of payment. However, scientists say: any money at the beginning of its existence was imperfect but then evolved, overcoming the shortcomings. And only after a considerable time became the main source of payment.
As an example, they provide the electronic payments. The first e-mail was sent back in 1971 but electronic money became a recognized means of payment only in the next century. Cryptocurrency has appeared recently and is only at the beginning of the path of its development. In that way, it is possible to forecast its further development into the common mean of payments.
In case if the cryptocurrency will be able to demonstrate progress as a means of exchange and a unit of account – the same as demonstrated as a means of accumulation – it may become a viable technologically new form of money. Experts found six problems that the digital currency will have to overcome on the way to recognition by monetary means. At the same time, it is possible to claim that it will succeed to do it.
Among these problems are:
- Scalability. Many cryptocurrencies are built on the technology of blockchain that is not designed for large amounts of transactions.
- Ease of use. As with any invention, the convenient design is the basis of acceptance. Cryptocurrencies today require special knowledge.
- Regulation. Cryptocurrencies need common rules, whereas now in each country the issues of regulation are solved in their own way and only fragmentarily.
- Volatility (variability of the exchange rate). Fluctuations in value are inherent in all currencies, but in the case of cryptocurrency, it is excessive.
- Incentives. Any new financial system should answer the question of how the reward will affect its behavior. If it is not built correctly, this will allow one user to manipulate to the detriment of others.
- Confidentiality. For users, there should be available different levels of confidentiality.
If the predictions of scientists come true, the alignment of forces in the world economic system can drastically change. Instead of dollar billionaires, crypto-billionaires can dictate terms to the world market.