Although a few years ago it seemed like something very far-fetched, many of the analyses currently being carried out on the situation of fiat currencies are giving signs that they are approaching a collapse.
This is a situation that is getting worse as news of this situation becomes known. the serious problems affecting the major global economies, such as that of the United States, along with information that shows the traction that Bitcoin (BTC) and other cryptocurrencies are gaining among users around the world.
Based on this, most experts speak of 3 key elements present in the current economic dynamics, which make them predict a collapse of fiat currencies in the next 10 yearsThese are factors that have to do mainly with the unlimited printing of money, the growing distrust of people in traditional monetary systems and the high interest in bitcoin and decentralized finance.
Unlimited money printing and monetary debasement
As noted by the team at FasterCapital, a business incubator and accelerator firm that operates globally, fiat currencies are currently are subject to many vulnerabilities.
Among its main weaknesses mentions the fact about what Its value depends on a government decree and not of intrinsic value. A situation that –unlike what happened when money was backed by raw materials– makes these currencies are very fragile.
“And while this system has been widely adopted around the world, it is not without its flaws,” FasterCapital analysts note, adding that one of the main vulnerabilities of fiat currency is its susceptibility to inflationary pressures and its centralized management.
“Fiat currencies are typically controlled by central banks, giving governments significant power over monetary policy. While this centralized control allows for flexibility in managing economic conditions, it also exposes currencies to potential manipulation or mismanagement,” they explain.
It is precisely this centralization that allows governments print money at will to finance their budget deficits or stimulate economic growth, although without considering the long-term consequences.
This monetary policy, which generates strong inflationary pressures and undermines the stability of currencies, is the one that has been applied in recent years causing the economic crisis that we are currently experiencing. Even so, and despite knowing the effects it causes, it is a measure that is far from disappearing. continues to apply.
As CriptoNoticias has reported, a clear example is seen in the United States, whose debt crisis has among its main causes lexcessive money printing which was done during the Covid pandemic and which is still being implemented.
Its negative effects are also analyzed by the Looking Glass team, a platform dedicated to financial education, which in its articles stands out as in the US, from early March 2020 until February 2021; the money supply increased from $4 trillion to $18.1 trillion.
The practice that has been repeated in the European Union and in many other countries consists of using the inorganic issuance of money as a strategy to address short-term problems.
They end up generating endless inflationary cycles, constant devaluations and deficits which are already undermining people’s confidence in fiat money, leading them to turn to other assets as a safe haven.
Distrust in the fiat system
More and more people are abandoning traditional financial systems. The distrust generated by the monetary policies that are being applied and their results, make people set your sights on new options that has been emerging in recent years.
The high levels of asset adoption useful for saving, like bitcoinare proof of this. Such growth has made that even banks have decided to incorporate cryptocurrencies in their services, as a mechanism to avoid disappearing.
Governments do it too with projects such as central bank digital currencies (CBDC), but as retain control of the Statesdo not enjoy much acceptance.
At this point, it is important to remember that the value of most currencies and money It stems from the fact that people think they are valuableIf that trust is lost, the path to collapse is paved.
Faced with this possibility, the FasterCapital team proposes a series of actions that would facilitate “navigating the uncertain future of fiat currencies.” These include advice for central banks and international organizations to change their policies.
To the citizens it is recommended diversification of investmentstaking advantage of the technological advances that support assets such as cryptocurrencies.
Most analysts see the future of fiat as very uncertain. Source: FasterCapital.
The growing distrust of fiat money is one of the elements also cited by the Mises Institute. to explain because considers that collapse is feasible of fiat money.
However, consider that such a fact It will not mean the disappearance of fiat moneyas it fears that States – through regulations and intervention – will remain strong in the battle to prevent the death of the traditional system that sustains them.
«The fiat money system will not disappear just like that. Any expectations or hopes in that sense must be moderated. But yes, The fiat money system could collapse; although there is a significant likelihood that it will persist longer than most people might think. This prolonged existence may come at a cost: the usurpation of the freedoms of citizens and entrepreneurs by a fascist state would be more profound than most people realise.
Mises Institute.
The mechanism to deal with government resistance to losing control is already in place and is based on using the demand for money to offer individuals alternatives that satisfy their needs. It is the same factor which justifies money printing and which Mises analysts call the “Achilles’ heel” of the system.
«The concept of free market money is easy to understand and, from a technical point of view, quite simple to implement. By giving autonomy to individuals to choose their preferred currency, The Achilles heel of the fiat monetary system is attacked and ultimately benefits the vast majority of people,” the Institute says in its publication.
This is what the ecosystem has been offering Bitcoingiving people alternatives to manage their money independently from the State, in addition to protecting themselves from control, inflation and devaluation.
Bitcoin adoption is growing and changing investment habits
The results of monetary debasement and the distrust it generates in people are already visible, signaling the collapse that many expect.
Cryptocurrency adoption is growing substantially and reaching levels that seemed unthinkable years ago. The most recent report from the analysis firm Chainalysis demonstrates this, with a curve that despite the ups and downs tends to rise from 2021.
Adoption data is confirmed by most studies. The Gemini exchange’s “Global State of Crypto 2024” report reaffirms an unusual growth in the last year.
“There is persistent investor confidence in the potential of cryptocurrencies as part of their portfolios,” the report notes. It coincides with other studies that reveal how bitcoin is rapidly becoming the store of value preferred, highlighting the scope of its use.
Big companies, hedge funds, pension funds, sovereign wealth funds and even entire nations are beginning to consider bitcoin as part of your investment strategy.
The trend points to continued growth in cryptocurrency adoption. Source: Chainalysis.
Bitcoin ETFs were one of the most recent pushes that catapulted the asset to new heights, Generating new forms of adoption. Now, for investors who were previously hesitant, it is not a mistake or a madness to invest in digital currencies. On the contrary,It is a mandatory asset in the portfolios.
At the same time, a significant group of circular economies are multiplying and being maintained throughout the world. They are the famous bitcoin citadelsplaces where Communities seek to move away from fiat and state control.
Seen in this light, the paths are increasingly open for the rise of decentralized systems and new forms of money that attract people’s attention. A trend that also increases the odds that the fiat system faces a major crisis over the next few years.
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