Cryptocurrencies could soon replace fiat currency as the preferred choice. According to a study undertaken by professors from Imperial College London and Imperial College Business School, cryptocurrencies have the potential to go mainstream. Bitcoin, the world’s first cryptocurrency could soon become the preferred choice for sending payment.

Findings of the study

Professor William Knottenbelt and Dr. Zeynep Gurguc have stated in their study that cryptocurrencies already fulfil one of the three basic roles of paper money. Fiat currency has been used as store of value since ages. The professors have said that digital currency is already being used as store of value and thus it already satisfies one key criteria.

The researchers state that the three important criteria are store of value, medium of exchange and unit of account. Store of value implies individuals can save the asset for use at a later time. Digital currencies like Bitcoin and Ethereum do fulfil this criteria. For any currency to be used it must be have a medium of exchange. The professors also list unit of account as the third criteria.

According to them, Bitcoin and cryptocurrencies will have to make progress on scalability, design and regulation to achieve the remaining two criteria.

Bitcoin replacing fiat money

Professor William Knottenbelt said that decentralized cryptocurrencies are evolving rapidly. He added,

There’s a lot of skepticism over cryptocurrencies and how they could ever become a day-today payment system used by the man on the street. In this research we show that cryptocurrencies have already made significant headway towards fulfilling the criteria for becoming a widely accepted method of payment. These decentralized technologies have the potential to upend everything we thought we knew about the nature of financial systems and financial assets.”   

Though the research has also stated six challenges that cryptocurrencies must overcome if they are to become the preferred payment method. They are scalability, usability, regulation, volatility, incentives and privacy.