5 minutes

Cryptocurrency between today and tomorrow

Muhammad Salem Al Ali

March 24, 2022

The public before the private are wondering whether cryptocurrencies can replace traditional currencies, and whether there will be a day when they will be the only option when making financial transactions and closing deals.

Of course, no one has the full answer, but it is possible to put some perceptions and approaches, and for that, let us first agree that money is a social phenomenon associated with a particular society, and if human societies throughout their history have produced many forms of money, what distinguishes them all is to consider them A common social component and a means of payment regulated by nominal property.

That is, in a word, we can say that any form of money, as with all other social phenomena, its success depends primarily on the acceptance of society.

And social acceptance here does not imply the consent and approval of every member of society, but rather it is a desire to keep pace with it, based on the decisions and judgments of the bodies with authority and delegation, which are represented in modern societies, the central banks.

Thus the success of cryptocurrency depends primarily on its acceptance throughout society, and that it is trusted as a stable stock of liquid assets, and a public form of purchasing power.

Can cryptocurrencies meet these two basic conditions?

As for the first condition, we find that at the present time, general acceptance in modern national or international societies requires permission from the central authorities. To build a system outside this framework, but rather seeks to bypass banking systems and remove them completely from the picture.

The essence of cryptocurrencies is a peer-to-peer electronic buying and selling system that does not require mediation or intervention from any financial institution, agency or any other party, and herein lies the biggest challenge facing these currencies.

As for the second condition, which is related to the fixed purchasing value, it must be said that this value is based entirely on the trust of the community, and in order for this trust to be achieved, the money must be put into a specific type of thing that has the ability to instill this confidence.

All of the above leads us to the conclusion that the factors that govern the future of these currencies are those related to the perspective of governments first, and the historical context in which monetary systems developed secondly, not to mention another factor that some may overlook, despite its great importance, which is the increase People are interested in the positive aspects of cryptocurrencies without considering the true intentions of their creators.

The obvious fact here is that the sovereign authorities will remain a stable pillar that enjoys the absolute confidence of society in terms of managing financial systems and issuing stable money, and therefore digital currencies for central banks is an idea whose time has come, not only because it plays on the path of future technologies and sciences like encrypted digital currencies, but also Because it retains the essential features of a successful currency such as stability, liquidity, accountability and integrity, which only a central bank can provide.

Since the future will inevitably include a wide mix of digital currencies, both centralized and decentralized, that will coexist with traditional currencies and other physical assets, we find that the digital currencies of central banks, if designed correctly, will provide an entirely new form of money in the digital age And a global payment system that is highly efficient and has unlimited access, and has the strength and stability that enables it to face all transformations.

Founder of Suhail Smart Solutions

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