As cryptocurrencies’ adoption is increasing day by day with over 18,400 projects available, it’s common to hear various arguments about whether cryptocurrencies are in fact currencies or assets.
Many experts believe that it can be an alternative to fiat currencies, due to the capability of mitigating inflation, its peer-to-peer payment, the possibility of cross-border remittances, and other challenges associated with traditional currencies and finances available globally.
The root of the name ‘cryptocurrency’ itself is attributed to the cryptography format and to the fact that it can be exchanged by peer-to-peer technology. However, the question still remains for some users and nations.
So, let’s take a closer look at some of the perspectives that push crypto towards the concept of a digital currency.
Bitcoin emergence in 2009
The launch of Bitcoin, the world’s first cryptocurrency, was back in 2009 and it was built purely as a peer-to-peer payment protocol.
Since that, lots of water has flowed into the river till now and various other cryptocurrencies have also been launched.
Some crypto is just mimicking Bitcoin’s mechanism, like Litecoin, Bitcoin Cash, Ecash, while others are based on totally new use cases where they solve various issues like privacy, education, land registry, agriculture, logistics, supply chain, etc.
Bitcoin and other cryptocurrencies are also called digital gold, as they are very scarce with limited supply – the same as physical gold which even though is not limited in supply, it’s also too scarce.
Consequently, we can argue that cryptocurrencies are currency, as they can be used as one regardless of not having any country of origin.
Own crypto governance
Cryptocurrencies have their own governance structure and are always operated by the community and never owned centrally like fiat currencies, which are owned by the state.
And while there is an unlimited supply of Fiat currencies that always increase inflation, cryptocurrencies are limited in supply and always mitigate inflation.
Actually, the only reason various state governments fear crypto is that it has the capacity to take over their local currency, as more and more people start using it instead of the official money.
Now the world has become a global village, a currency that is accepted by many nations and not only by one will have more value.
Massive crypto adoption
The US dollar and the Euro are the only two Fiat currencies that are accepted by many nations.
However, they are not above inflation and they can impact a lot of the lives of citizens because the value keeps on decreasing.
As for crypto, this is totally the opposite – the more people hold or use it, the more value increases.
Big economies like the US, Russia, China, and India are working to beat the challenges they are meeting with cryptocurrencies in their respective countries.
The US has recently set up a committee to check how crypto can be adopted; Russia is very positive about the adoption of crypto and India too has shown its interest in crypto by imposing a tax on it, whereas China has outright banned crypto.
Many other countries have also shown mixed reactions towards crypto adoption, as there is no global standard on its regulations.
Call for global standard on crypto
Recently, India’s prime minister, Narendra Modi, asked the global community to work toward standardizing crypto on its adoption and the challenges it poses to the nations per se.
In the US, Canada, and some European nations there are various crypto exchange-traded funds (ETFs) where investors can invest in cryptocurrencies without holding any crypto.
In India, the government is yet to bring a bill that will specify what cryptocurrencies can be used in the same way.
On different platforms, the Indian ministry of finance has made it clear that they will regard crypto as an asset class and the Finance Minister, Mrs. Nirmala Sitaraman, has made it clear that they will never recognize crypto as a currency.
Looking at these developments, one can be certain that crypto can never be a currency but only be looked at as an asset class for massive adoption.
However, amongst all discussions, official departments may not publicly acknowledge crypto as a currency, but it’s hard to believe that they will be able to ban people from treating it as one.