India’s Former Finance Secretary Claims Currencies Will Be Digital While Cryptocurrencies Won’t Survive

Subhash Chandra Garg – India’s former Finance secretary – has been vocal about cryptocurrencies for a long time now. He has been playing a crucial role in shaping India’s draft policy on cryptocurrencies. Garg recently released a new blog post in which he discussed the decline of cryptocurrencies while central banks are increasingly adopting digital currencies.

Why Cryptocurrencies Will Die

Garg discussed why cryptocurrencies would collapse. He said that cryptocurrencies have a short future as they are not commodities with any intrinsic or acceptable value.

Cryptocurrencies can be created in almost unlimited quantities. They, therefore, have no value as the supply far outstrips demand, and their prices fluctuate depending on supply and demand situation. Furthermore, some cryptocurrencies have no buyers and thus fall off the system quickly and disappear.

Cryptocurrencies have been used in payments like international transfers. However, they are not gaining any traction because there is not fixed/stable value, which is the most important condition for any currency to be a currency.  

There is also no any official cryptocurrency. As a result, a number of countries are coming out to unveil their own national digital currencies, a move that might tame the growth and influence of cryptocurrencies. Central banks will be responsible for controlling the national digital currencies and therefore allow citizens to carry out certain transactions.

Furthermore, only a few crypto consumers use cryptocurrencies to take advantage of their reduced cost of payments, particularly international payments, remittances, and transfers. Also, nearly all crypto investors are motivated by the desire to make a personal fortune by creating an “asset class” that spirals into higher valuations based on speculative demand.

Moreover, many investors have lost their real money and individuals, who are still investing, are more likely to face the same fate in the future.

According to Garg, all these explain why cryptocurrencies are likely not to survive.

Currencies Are Fast Becoming Digital

Today many functions of currencies are carried out digitally. Whenever a person makes payments or transfers money using instant payment system or other methods of digital payments like debit card, no use of paper currency is involved.

As the economy is rapidly becoming digital, money and currency cannot remain physical. Paper currency will increasingly become insignificant. Moreover, it costs a lot to print and manage the system of paper currencies. Digital money management is much cheaper than the cost of managing the paper currency system.

Currently, efforts to dematerialize currency notes are seen as central banks are showing their intentions to create national digital currencies. Digital transactions are expanding fast, at no cost of transactions compared with the system of paper currency-based transactions.

Thanks to emerging technologies that make the processing of digital money and currency domestically and internationally possible.

Holders can hold dematerialized currency notes in a digital currency card or virtually. People benefit as making payments becomes much faster, easier, and less costly. Consumers will, therefore, not need cryptocurrencies for payment or other financial purposes.