Yesterday on #MXTalks Episode 6, we talked about how crypto can complement fiat. Here’s our summary:
Crypto complements fiat, along with CBDCs. Each of them offer their own pros and cons, but they provide options for users, which can be a good thing.
Crypto is a good replacement for fiat in cross-border transactions, especially when the country’s currency is volatile and subject to inflationary pressure, and when travelling abroad as a universally accepted payment method — one does not need to keep small change.
While CBDCs offer convenience for users to convert crypto to fiat easily, it also introduces a centralized component, which may contradict the decentralized nature of cryptocurrencies and create complications due to politics and geopolitics.
One of the biggest concerns around crypto is security. The majority of people struggle to protect their passwords and private keys from scammers, increasing the risk of hacking incidents such as phishing or code hacking.
To minimize these risks, payment providers are implementing different types of protection such as passwords and authenticators, but even with these measures, wallets and assets can still be stolen if the website is malicious.
Developers need to be extremely careful with codes to prevent hacking, and that there needs to be strong mitigation plans and safety nets to increase security and reduce fraud in payments.
Another challenge to wider adoption of crypto is the perception that it’s a closed system and can’t be used for real-life purchases. However, companies like Pundi X and HamBit are already making crypto possible to use for everyday payments.
A last concern regarding crypto is the volatility in transaction fees. Critics argue that gas fees can be volatile and create uncertainty, but we argue that using cryptocurrency for cross-border payments is almost instantaneous and much cheaper than traditional banking systems.
Overall, payment providers need to come up with solutions to protect people’s assets while making it easy for consumers to adopt. Having options is important, and anything digital is considered a friend.
For the full summary and podcast, head over to https://marginx.io/mxtalks-episode-6-how-can-crypto-complement-fiat/