Economists Say The Age Of Physical Money Will Soon End, Replaced By Cryptocurrencies?

Paper money is predicted to end soon, replaced by digital money (AntaraNews)

JAKARTA – Paper money is predicted to end soon and will be replaced by cryptocurrencies. This was conveyed by economics professor Esward Prasad from Cornell University. Prasad believes that cryptocurrencies will revolutionize the financial system.

"The end of physical currency, cash, is definitely approaching and cryptocurrencies including Bitcoin have paved the way for that revolution," Prasad said, quoted from Yahoo Finance, Friday, October 8, 2021.

In addition, the Fed is also rumored to be conducting a review of the central bank's digital currency (CBDC) next week. Crypto and CBDC seems to be the prima donna in the future. The reason is that digital payment systems are increasingly being used in recent years. The United States (US) believes that the economy will expand into the digital economy.

However, Prasad believes that cryptocurrencies will not dominate digital payments in the future. The reason is that the level of crypto volatility is very high. The most likely is the use of stablecoins such as USDT, USDC, and the like, because stable coins are not affected by Bitcoin price fluctuations.

“My view on cryptocurrencies may eventually prove to be a broad exchange,” he explained.

On the other hand, cryptocurrencies have also fueled the emergence of stablecoins. Stable coins like the ones mentioned above have value tied to the US dollar. So stablecoins have the potential to be a means of payment. This is in contrast to El Salvador which has adopted Bitcoin as the country's official medium of exchange. Though the price of BTC is very volatile.

Prasad mentioned that digital currency can get support from the government so that it can provide egalitarian benefits for the private sector. Its development has also enabled large amounts of financial inclusion. Therefore, he said that the internet will bring people to the financial system exclusively.

This is the goal of many countries. Coupled with the government's efforts to issue a central bank digital currency or commonly called a CBDC. This is considered to be able to provide convenience to users who do not have access to credit cards and bank accounts.

“It will bring people into the financial system and also act as a portal for basic banking products and services for credit, savings and more,” said Prasad.