The obvious shift to the increased acceptance of digital payments is a consequence of the Covid-19 pandemic.
A quick observation indicates that a rise in the acceptance of bitcoin and other forms of digital currencies is striking an indelible mark on the world’s financial system.
Financial analysts overtime have argued that central banks across the world have failed to embrace cryptocurrencies, mainly due to the threat the digital currencies pose to government-issued ones.
Nevertheless, one can’t ignore these digital currencies as the technology around them is real, thus people are making a gradual shift from conventional methods to digital.
In its latest rise, the price of Bitcoin hit almost $20,000 (an impressive record no doubt)
Will Bitcoin replace fiat currency?
Across the world, there are many fintech startups solving the challenge around payments, however, the question now is will fiat or paper currency becomes useless as the world gradually enters a fintech age? Will the dollar and Euro go extinct?
These and many more are the questions that have shaped the thoughts of skeptics and some early adopters.
The concerns that have been expressed by some of its users is about the uncertainty in digital currencies long-term value, especially how it will transform into future gains as a result of its price volatility.
For instance, in 2017, the price of bitcoin decreased by over 50 percent, but in 2020 it increased by more than 140 percent.
Regardless, paper currency is still very much, here in Africa it is in massive circulation. Paper currency use thrives as a source of transaction most especially in rural areas where the people have no bank accounts.
In these localities for instance, even if you have a digital currency, your local merchant would still require that you get them converted to a paper currency if they don’t understand how it works.
With current indications, a significant shift may just be on the way. Bitcoin has increased in value while daily transactions and method of payments is taking effective changes.
The use of digital currencies offers convenience and speed at a reasonable cost. In a matter of seconds, you can get to send your funds to your families or business associate anywhere in the world.
Paying via digital currencies are also not subjected to government controls. If eventually central banks across the world, issue their respective digital currencies, then the issue of worries around digital currencies with respect to national currency adaptability is solved.
Nevertheless, the reality of this is that most governments don’t want to give up their main control.
Adopting digital currency disruption
A study from Brookings Institute shows that disrupting the traditional central bank system through digital currency is an eventuality that has to get considered if changes in the financial market will pose a major effect on central banks’ activities coupled with their ability to offer financial stability.
The way email is to digital communication, so also is the digital currency to the world’s current financial system.
The world must be ready to accept the realities of digital currencies because in a global economy that is going digital, transactions can’t be restricted by local payments only and unnecessary tax payments.
The digital transformation
A typical argument around digital currency is that it isn’t yet useful for regular daily living. In 2008, when the first digital currency (Bitcoin) was introduced, the aforementioned argument might hold, however, rapid changes in this space have seen innovation change this narrative.
A good number of startups for instance in Nigeria (Ellycry, Bitcoin Afrika, SureRemit e.t.c) have addressed the issues around the challenge related to spending digital currencies daily.
Digital currencies are transforming payments and with the transfer value, it provides on blockchain, the standard on the current financial system is worth considering.
People see digital currencies in many different ways, some view it as an asset for profit generation, some as a store value. Others yet see it as a means to economic freedom.
No doubt that digital currencies have come to stay. With its decentralized and secured system, the way payments are made is fast changing and it is just a matter of time for the complete overhaul.
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