Cryptocurrency adoption as an alternative to fiat currency systems

Persuasive Essay: Adopting Cryptocurrencies for a Secure Financial Future

Introduction

Ever since the Great Financial Crisis of 2008, people have been wondering how they can protect their wealth. With fiat currency like the US dollar (USD) in the hands of a Federal Reserve system that has no problem flooding the world with new cash to prop up markets, people have seen the value of their USD plummet ever since. Even just in the last few years, since the Federal Reserve printed off trillions in new dollars in response to lockdowns that would have destroyed the global economy, inflation has skyrocketed. Homes are now more expensive in terms of USD; cars are, too; and so are groceries. People are finding it harder and harder to keep up. What can they do?

The answer is to get out of USD and get into crypto. Yes, it is volatile. No, it has not been heavily adopted by people around the world. But volatility may become less and less, and with BlackRock getting into Bitcoin via its IBIT ETF, more every day people are getting their first taste of crypto (Maxwell). Cryptocurrency will become more and more mainstream in direct response to an out-of-control Treasury that is issuing debt as fast as it can and an out-of-control Federal Reserve that cannot help but continue to print cash to keep markets afloat. If the era of Quantitative Easing (QE) has taught us anything it is this: the US dollar is doomed along with every other fiat currency on the planet. You can get into gold, silver, platinum, or properties—but the easiest and best solution is to get into crypto—decentralized, secure, and scalable crypto. Bitcoin was the first and for now is the greatest. But a new technology by Israeli researchers called Kaspa has solved the trilemma that keeps people from mass adopting Bitcoin and crypto in general (Sutton, Sompolinsky). The trilemma is that a cryptocurrency can achieve two of three conditions that make it strong: 1) decentralized, 2) secure, and 3) scalable. The common consensus is that a cryptocurrency can have two of the three—but not all three (Reno, Haque). Now, Kaspa’s team is saying that it has solved the trilemma and is giving the world its first taste of what Bitcoin set out to be: true, peer-to-peer cash that works, is safe to use, and can handle everyday transactions with incredible speed all while using a proof-of-work consensus on a truly decentralized network. Are you interested yet? You should be. If you thought Bitcoin was a good answer to the problems of fiat, you will love Kaspa.

Nonetheless, even if one is unfamiliar with crypto, there is good reason to give it a serious look. This essay will show why everyone should consider holding some form of cryptocurrency. Ultimately, it will explain why due to its decentralized nature, limited supply, and the ease of transactions, it makes a good case for broader adoption as an alternative to fiat.

Limited Supply: A Safeguard Against Inflation

Cryptocurrencies like Bitcoin have a capped supply, which means there is a scarcity to them similar to precious metals like gold. This limited supply helps protect against inflation, which is the plague of fiat currencies, as it always erodes their value over time (Zakarneh et al.). The predetermined maximum number of Bitcoin, for instance, is set at 21 million, so that the cryptocurrency cannot be devalued by the creation of new coins. This aspect makes cryptocurrencies an attractive investment and a hedge against the inflationary tendencies of fiat. Fiat will, in the long run, go to zero. Just look at the value of the USD over the past century. If that does not alarm you, nothing will. Now compare that to the value of Bitcoin over the past ten years. You should see a big difference.

Ease of Transactions: The Practicality of Digital Currency

What gets people turning back to fiat, however, again and again, is the fact that it is easy to get and use. This is a real concern with crypto, as there has not yet been mass adoption. But that will change over time. The technological backbone of cryptocurrencies even now already allows for transactions that are fast and unrestricted by geographical boundaries. Bitcoin has its Lightning network, for instance. It is not perfect, but it is useable. Basically, it means that cryptocurrencies are convenient for global trade. According to Astuti et al., the blockchain technology underlying cryptocurrencies supports rapid and secure transactions without the cumbersome process associated with using traditional banks (who can freeze your money if they do not like you). This ease of transaction, coupled with low transaction fees (usually), makes cryptocurrencies an ideal medium for digital transactions in the modern economy.

Counterarguments and Rebuttals

Critics often cite the volatility of cryptocurrencies and their association with illicit activities as significant drawbacks. Yes, it is true that the prices of cryptocurrencies can be highly volatile, but this is a common trait of any emerging technology or financial asset. As the market matures and more regulatory frameworks are developed and more big players like BlackRock get involved, such volatility is likely to decrease. Moreover, the transparency of blockchain technology can actually aid in combating illegal transactions more effectively than traditional systems, where anonymity in large-scale cash transactions can lead to financial malfeasance. So that is not really an issue, either. Really, the biggest argument against crypto in general and Bitcoin in particular is that it does not solve the trilemma. Bitcoin is decentralized and secure—but it needs Lightning Network to scale, and Lightning settles off-chain, which leaves open the door for potential manipulation or attack.

So what is the answer? Remember Kaspa. Here is where it comes into play. It is relatively new to the crypto world, being only a couple of years old. But it was developed by some of the original crypto minds in the space. In fact, Sompolinsky authored Ghost Protocol, which Ethereum uses in a simplified form. Sompolinsky has since refined his work (see DAG Knight) and now it is just a matter of time before the world takes notice of Kaspa the way it did Bitcoin and Ethereum. Kaspa solves the trilemma like no other proof-of-work coin on the planet. There is a lot to look forward with it.

Currently, Kaspa implements a novel protocol known as the \"GHOSTDAG\" (Generalized GHOST Directed Acyclic Graph). It is a newer version of Ghost, and one that fixes some of the initial problems of Ghost that Ethereum did not address. Unlike traditional blockchain systems that operate on a single-chain model, Kaspa’s DAG-based protocol allows blocks to be mined in parallel, which allows for significantly increasing the throughput and allowing it to scale. This structure can handle a much higher volume of transactions per second compared to traditional blockchains. It is basically like the VISA of the crypto world.

In short, crypto works. Bitcoin is king for now. But Kaspa is the crown prince of crypto—hidden away for the time being. As more and more people, however, become disillusioned with fiat and see their wealth evaporating away thanks to inflation, they will by and by come to crypto because its value is in its use. Kaspa has the greatest use case because it can be peer-to-peer decentralized cash: no governments involved in controlling it, secure from attacks, and scalable on the level of the fastest credit card companies without having to rely on an external network like Lightning. It does everything on the base layer—which is a sign of the genius of its developers.

Are you interested yet?

Conclusion

The adoption of cryptocurrencies is real and is happening faster and faster. It represents a forward-thinking approach to personal and global financial health—a necessary approach, even, as fiat around the world crumbles into ashes. Inflation is still hot in the US, and no one knows if it will ever come down. Crypto is not waiting around, either. The decentralized nature of the best cryptocurrencies offers a new level of security and autonomy, and their limited supply protects against inflation, and their transactional ease supports modern, globalized commerce. Given these compelling benefits, people should consider investing in and adopting the use of crypto. It is not just a hedge; it is a new way to spend.