There have been a lot of discussions as to what Bitcoin and other cryptocurrencies may be able to achieve in the long run. This new form of money has a lot of potential, although that doesn’t mean it will replace fiat currency anytime soon. The latter category may not be around forever, though. Deutsche Bank’s Jim Reid, for one, firmly believes fiat currency will cease to exist soon.

Fiat Currency has Many Different Problems

Truth be told, it is almost a miracle that fiat currencies – which have seen very few changes over the past few decades – have been around for as long as they have. Indeed, the competition in the monetary ecosystem is heating up quite a bit. There are many substitutes for fiat currency these days, even though not all of them are officially recognized all over the world.

Jim Reid, a strategist with Deutsche Bank, seems to be aware of the problems affecting fiat currencies as we know them today. In his view, it is possible that fiat money will disappear very soon. The reasons for his somber outlook are not hard to find, first among them being increased inflation. New money is printed and brought into circulation far too often these days. Helicopter money, as this activity is known, simply isn’t sustainable over the course of multiple years.

Moreover, Reid points out that fiat currency is no longer backed by anything that has value. Until a few decades ago, every fiat currency bill or coin was backed by gold. Ever since that changed, fiat money has represented nothing more than an IOU by a government or central bank. This empty promise to adhere to the value of a given bill or coin has been widely accepted as a means of exchanging value, even though it really shouldn’t be.

Saving fiat currencies from their demise will not be easy by any means. There is no viable countermeasure to inflation, and the damage caused over the years can’t be undone either. Inflation is slowly spiraling out of control, and loose policies, overprinting of money and extensive leverage only make matters worse. When push comes to shove, the end of paper money and physical coins will occur a lot faster than people may anticipate.

Moreover, a financial collapse only seems to be a matter of time right now. While things may not get out of hand in any spectacular manner right away, it is all but inevitable that fiat currencies will disappear. Cryptocurrencies and digital assets are the likely choice to replace fiat as we know it. This includes central bank digital currencies, although new forms of money not controlled by the government or banks will eventually win over a lot of people.

How this situation will play out is anybody’s guess right now. It is certainly true the current monetary policies of banks and governments will need to change in order to save the system. Even so, it is always good as a consumer or corporation to show an interest in alternative financial solutions before things get out of hand. Cryptocurrencies may not necessarily be the answer to all our problems, but they make a very strong case for themselves.