The tempting hype surrounding cryptocurrency is undeniable. Cryptocurrencies have dominated the imaginations of investors, journalists and the public alike, to the extent that some of them considered them the deserving demands of the supply currently occupied by fiat currencies. So, what is the likelihood that cryptocurrencies will remove fiat currencies and convert them into the mainstream currency system? FXTM's Senior Writer Ben Lovell-Figurs peeks beyond the façade, glamor and celebrity CFO's to find the answer to this question.

Once nearly 50 years since the global economy switched from commodity-backed currencies to paper money. Fearing the declining economic impact of the United States and the rising costs of the Vietnam War, the then US President, Richard Nixon, credited the dollar for the US gold stock and ended the Bretton Woods Agreement. Cryptocurrency enthusiasts would like to be convinced that the ozone surge of assets like Bitcoin, Ethereum, and Ripple sounds like a thundering death knell for fiat money. They say that after half a century of tight financial legislation by governments and central banks, it is time for individuals to regain control of their money - in a lofty goal that can be achieved if digital currencies become the economic status quo.

So, what do cryptocurrencies like Bitcoin have over fiat currencies?

A start, is appropriate. Cryptocurrencies have the potential to save a lot of time and money for commercial and financial services companies by eliminating the middleman from transactions, and the fees paid for these transactions tend to be much lower as well. And this is not all: the major criticism of the paper system is the way in which a country's currency can change outside of local borders. Nigerian naira is a prime example of this - its value depreciates 30% once removed from Nigeria. Digital currencies - for the most part - are not issued by any country or government and are therefore not subject to the same geographical fluctuations.

And there are the infallible and confidential records provided by the blockchain. The ever-growing blockchain, as an encrypted record of transactions, is a technology that was developed alongside Bitcoin by the mysterious Satoshi Nakamoto. Bitcoin is a valuable defense against fraud, as records cannot be modified after a transaction - it also enables complete decentralization, the property of cryptocurrencies that has more value than anything else. Decentralization means that cryptocurrencies are not legalized by a government or financial authority, and therefore are not tied to the policies and agendas of central banks. Instead, cryptocurrencies get self-legislate through their own one-to-one networks

So far so good. Unfortunately for the cryptocurrency corps, there are a host of compelling reasons why fiat money cannot be exchanged for digital currencies. The main one among them is the current speculative whos led by big names like Bitcoin and Relip. It's still too early for Bitcoin's highs in 2017 to be a true financial bubble, but the fact that Bitcoin - and cryptocurrencies in general - has an unprecedented level of obsession is unavoidable. why not? Cryptocurrencies are undeniably innovative, intuitive, technological and futuristic currencies, the features that make it difficult to resist them by the media and the public. The problem with noise like this is that it often camouflages basic and practical concerns, including:

Money laundering and decentralization

Anti-money laundering initiatives are a major concern in the financial services arena, with banks and financial companies spending huge sums to ensure that legislation is fulfilled. If digital currencies replace fiat, the secrecy available from technology such as blockchain will make fighting money laundering extremely difficult, costly and time-consuming. Many banks and other financial systems will be reluctant to embrace digital currencies for this reason. A similar theme emerges from the monthly decentralized nature of digital currencies. Governments and financial authorities are very unlikely to acknowledge any currency over which they have no control or influence.

Protection

While the blockchain ensures that cryptocurrency transactions are securely recorded, the same level of protection is rarely applied to the currencies themselves. Cryptocurrencies are subject to hacking, electrical power problems, software problems, and regular human errors. A harmless matter such as a cup of coffee spilling onto your hard drive or external memory can result in millions of dollars lost in Bitcoins. We pity the investor who mistakenly throws a laptop with 7500 bitcoins and spent days looking in landfills (true story). Losing your credit card does not mean lack of access to the money in your account.

the size

The market size of the various global paper currencies reaches about 81 trillion dollars. It would be possible to collect all the cryptocurrencies in the world, and the combined market limit for them will not exceed $ 127.5 billion. Cryptocurrencies have a long way to go before the stock system begins to appear in danger. The costs, time and effort required to modify the paper-based financial system and replace it with the digital system are astronomical - national economies, businesses, financial institutions and consumers have all had to switch from the system they've been using for more than a century.

Ultimately, digital currencies are more likely to become like fiat currencies if they are to achieve general acceptance. Financial institutions and governments are realizing the multiplication of digital currencies, with some countries, such as Sweden and Russia, already on the road to developing their own digital currencies. They seek to benefit from the effective implementation of the benefits, ease of tax application and cost reduction that fiat currencies offer, without the security problems, money laundering facilities and lack of central supervision. This means that the cryptocurrencies of the future will definitely appear on the terms of central banks, financial institutions and government agencies. Sorry the perfectionists - the power strikes again!