Kenneth Mak: Fiat Currency Will Soon Be Obsolete

Nothing has been affected more by digital technology, and the internet than the way money is dealt with globally. Banks and other financial institutions have had to change systems and protocols to adapt, but by and large, have clung to the fiat currencies they have always used, US dollars, the euro, yen, British pound and all the others. Then came 2009.

The Bitcoin Revolution

In 2009 Bitcoin was launched by Satoshi Nakamoto, and the world of finance was changed forever. Since then, several thousand cryptocurrencies have been launched, altering the worlds of commerce and investment completely. But the fiat currencies have hung in there, but for how long?

The “Gold Standard”

There was a time when currencies were backed up by concrete wealth in the form of gold, but governments moved away from the “gold standard” many moons ago. Fiat is Latin for “by decree” and signifies that although the notes or coins have no real intrinsic value, they are worth what they say and are guaranteed by the governments in question, and people trust them.

A big problem with fiat currencies is that as there are no tangible assets to back them up the powers that be can simply print more and more. If you look back to the 1920s and the Weimar Republic, you can see that this just doesn’t work, and other countries and governments have discovered the inadvisability of this as well.

Financial Instability

Since the financial crisis of 2008, largely caused by deregulation of the money markets, countries all over the world have been to a greater or lesser degree in financial turmoil. Some have tried austerity while others have tried to spend their way out of it. Whether you call it monetizing the debt or fiscal easing, more money has been made available, financed by taxes and borrowing. But eventually, you run out of people to tax and the more you borrow, the fewer people are inclined to lend. Plus, eventually, loans have to be paid back – with interest.

Are Cryptocurrencies the Solution?

So can cryptocurrencies improve the situation or even replace fiat currencies? Kenneth Mak, a 21-year-old tech entrepreneur from Singapore, believes so: “If the Federal Reserve just keeps on printing dollars and other governments follow suit, as many are doing, then fiat currencies will be worth nothing. Cryptocurrencies could fill that void.”

What Advantages Do Cryptocurrencies Hold Over Fiat Currencies?

  1. Importantly, a big difference between the traditional currencies and cryptocurrencies like Bitcoin, Etherium and the rest is that the latter are not government-based but are, in fact, decentralized. Changing government policies affect the money markets, those based on fiat currencies, on a daily basis, but cryptocurrencies are immune from these political vagaries, and that insulate investors.
  2. The technology behind cryptocurrencies, the blockchain (a digital ledger), appears to be virtually impossible to corrupt. It would need massive computing power and require multiple simultaneous attacks on many discrete systems.
  3. These security measures, along with others, means forgery of cryptocurrencies is, as far as it is possible to ascertain, impossible.
  4. Transaction fees are much lower for cryptos than fiat currencies. Mak says that, currently, Bitcoin transactions worth nearly $5 million costs in the region of just $200. This is very exciting for anyone trading. When conducting such transactions using fiat currencies, one currency needs to be changed to another, typically US dollars, and then converted to another at the end, each stage incurring large charges.
  5. There are no borders involved in cryptocurrencies. A bitcoin is a bitcoin, whether you live in the US, Singapore, France or Outer Mongolia. When you’re charged for something in bitcoin, there’s no need to figure out what that is in your own currency or think about additional fees or taxes.

There are problems involved with cryptocurrencies that need to be addressed before it’s embraced by everyday people as their preferred currency. The very fact that transactions are so secure and untraceable means that they are open to misuse by criminal elements. However, crime has long used fiat currencies for its purposes, so cryptocurrencies are not unique in this respect. Also, users of Bitcoin and its stablemates can avoid taxation, and countries may increase taxes elsewhere to offset taxes like income tax.

Mak is certain that these problems can be ironed out and that “Cryptocurrencies offer a better, more stable global financial system than fiat currencies – it is that simple.” To follow Kenneth or to hear more from him, you can find all his socials and other information at www.kennethmak.com.

About RJ Frometa

Head Honcho, Editor in Chief and writer here on VENTS. I don't like walking on the beach, but I love playing the guitar and geeking out about music. I am also a movie maniac and 6 hours sleeper.

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