In 1775, the U.S. created the Continental Currency, the first step in creating a national currency. In 1792, the dollar was established as its standard unit of money. However, it would take about another 100 years for the U.S. dollar to truly begin to be recognized as an accepted currency, both in the U.S. and internationally. In 1889, journalist and author Elizabeth Jane Cochrane, under the name of Nellie Bly, wrote about the dollar in her true-life novel Round the World With Nellie Bly, stating that the U.S. dollar wasn’t accepted in many places during her 72-day journey. In some places, the U.S. $20 gold piece was used as jewelry, not as currency, and those locations that would accept dollars did so at a 60% discount.
No fiat ecosystem has been introduced overnight. They all have their roots in allowing goods and services to be exchanged for pieces of paper that were afforded a certain economic value. These systems grew and grew until they became the accepted form of currency. Just like the U.S. dollar was not recognized by the majority of merchants in Bly’s travels, digital currency is experiencing the same type of resistance. Sometimes it is accepted; other times, it is rejected. However, it continues to grow and gather a larger circle of interest that enables its ecosystem to gain traction.
When fiat pundits try to argue that cryptocurrency has no place in the economic world, they seem to forget the difficulty that currencies have experienced in evolving to where they are today. In fact, the evolution of currency hasn’t ended. The U.S. dollar system has undergone a myriad of changes over the past century and stopped being pegged to gold in the early 1970s. Now, the dollar is only backed by the “full faith and credit” of the U.S. government. Yikes.
There’s little doubt that cryptocurrency is gaining ground. Recent studies have shown that crypto is becoming the preferred method of payment among the younger generation. There are now, on average, more daily crypto transactions than there were six months ago—almost 50% more—and this is light of the market experiencing a lull in prices.
Getting beyond the argument that crypto has no future, as many have tried to argue and which is obviously not the case, there is still the weak attempt to blast crypto by suggesting that it is only good for illicit activity. Yes, cryptocurrency and Silk Road were brethren at one point. Yes, there were a lot of “bad hombres” on Silk Road. No, crypto is not a haven for thieves and hooligans. No, there won’t be another Silk Road.
There is overwhelming evidence that money-laundering and other illegal underground networks operate in plain sight using fiat, even by financial institutions consumers are supposed to trust. Do a quick search on Wells Fargo, The Mississippi Scheme or The Great Insider Trading Scam and you will find repeated examples of corrupt individuals and businesses that have been able to score billions from innocent consumers, none of which has ever been repaid entirely.
Several large financial institutions in Europe, including Deutsche Bank and Barclays, are still embroiled in a massive money-laundering scandal that saw the banks help their customers move around $63 billion. It’s interesting that this story receives virtually no coverage compared to crypto, but I digress.
We could talk about Enron, or Adelphia, or Bernie Madoff—the man who ran the largest Ponzi scheme in history and which bilked investors out of $65 billion. Adelphia is a former cable TV provider whose founder, John Rigas, went to prison for using the company like his own piggy bank. Rigas is almost singlehandedly responsible for destroying an entire town in Pennsylvania. Enron and its founder Kenneth Lay became famous for cooking the books for 16 years before it finally went bankrupt, causing billions of damages in losses. Enron wasn’t even the most fraudulent company—that title could possible go to WorldCom, a telecom company that fudged its numbers by as much as $11 billion.
In 2016, consumers lost around $16 billion to credit card fraud in the U.S. alone. The fraud was facilitated by a number of channels—ignorance on the part of the consumer, database hacks, willful neglect that led to the compromise of personal data. However, the how isn’t as important as the what. Fiat theft is still rampant today, even though the economic ecosystem has had 200 years to evolve and offer better protection.
The list goes on and there seems to be a never-ending stream of individuals who are willing to try and game any system and there is no reason to think that crypto would be any different. However, cryptocurrency has the ability to excel where fiat can’t. It is controlled by a consensus, not a central authority that can arbitrarily decide its value, and is not capable of suffering from an economic recession. That may seem erroneous given the crypto market’s current state, but the market does not reflect what cryptocurrency truly is—an alternative to fiat that is designed to be used, or spent, and not just kept in an account with the hopes that the prices will skyrocket.
The cryptocurrency market is now more stable than it has ever been. This is a good thing, and it is also what fiat currencies have experienced throughout history—some initial insecurity, some initial instability and, eventually, acceptance as a usable currency. However, only considering the U.S. dollar, it has taken over 200 years to reach for it to get to where it is today.
Cryptocurrency is receiving a much greater response in its youth than fiat ever did. This is because crypto, as it was first introduced by Satoshi, was already an adult. It was already designed to avoid many of the pitfalls fiat has experienced. Is it perfect? No, of course not—no currency is nor will it ever be. However, the fact that it is gaining in adoption and use shows that the world was ready for a different type of currency. Crypto is that answer and, like it or not, it is here to stay.
Instead of wasting time, energy and resources trying to reverse progress, it makes more sense to embrace the future and develop guidelines that will allow digital currencies to grow and which will protect consumers. Anything else is nothing more than pouring water into a sieve.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.