Lately, there seems to have been a sudden shift towards criticising cryptocurrencies. We’ve seen criticism from international central bankers or financial regulators, warnings from the market sector, and no shortage of academic criticism. Much of the focus of criticism or opposition is twofold: first, is there any “value” in crypto assets at all? Second, are the rising prices of encrypted assets enough to prove their value? The core lies in the question of “value”. If there is no value at all, there is no attribute of “currency” and the price basis is lost. Therefore, the question must be answered, is there “value” in encoded assets? If so, where is the “value”?

Fiat comes from the Latin “let it be done”, meaning that the currencies we use today, which are fiat coins, hold value only as they are fully backed by full faith and credit in the government that issued them. Since fiat money is not tied to physical reserves, such as a national stockpile of gold or silver, it risks losing value through inflation or even becoming worthless in the case of hyperinflation. If people lose confidence in a nation’s currency, the money is no longer stable in value. This is how paper money replaced trade and barter, because it was a more effective medium of exchange that also dealt with problems of trust and reciprocity.

Therefore, if a cryptocurrency were to replace a fiat currency, it would have to be a more efficient medium of exchange than fiat currencies, while still dealing with issues of trust and reciprocity.
Bitcoin is a more effective intermediary for transactions than fiat money. It is more resilient, and its resiliency will increase as the network grows; it is digital and can be used for international transactions; there are no transfer fees, and transaction fees are much lower. The central technology of all cryptocurrencies, the blockchain, deals more effectively with issues of trust and reciprocity than central banking. In addition, the distributed nature of the blockchain increases the security of the currency and makes it less vulnerable to manipulation or attack by the central bank. Overcoming the mistrust of potential users and becoming known as a legitimate medium
of exchange for legal purposes is the biggest challenge for a cryptocurrency company.