Cryptocurrency has exploded in popularity in the past few years. The overall market capitalization for the asset class was a mere $200 billion in 2019, and then it peaked at $2.4 trillion only two years later in 2021.

This asset class has a steadily increasing (and often decreasing) market capitalization that has led to many people wondering if cryptocurrency could ever replace cash. 

The anonymous creator of Bitcoin described the initial cryptocurrency as a “peer-to-peer electronic cash system.” The goal was to allow people to transact directly with each other without relying on a trusted third-party, such as a bank or government. 

However, Bitcoin and its crypto cousins have struggled to gain adoption as an actual currency. One recent study has shown that only one-tenth of Bitcoin transactions are ‘economically meaningful.’ Most meaningful transactions are conducted by traders hoping to buy low and sell high.

Will cryptocurrency ever gain widespread popularity as a currency? If so, will crypto replace cash? Today, we explore these questions alongside considering what switching to cryptocurrency would mean for the world.

What is Cash? What is Cryptocurrency?

Let’s take a moment to define precisely what we mean by each of these terms before diving deeper.

“Cash” in this instance means fiat currency, which is currency minted by a government and given the legal status of a currency. So we aren’t only talking about paper money, but any type of fiat currency, ranging from the bills in your wallet to the numbers in your bank account. 

“Cryptocurrency” refers to any digital currency based on the blockchain technology introduced with Bitcoin. We’re not restricting the conversation to Bitcoin but instead discussing the entire asset class.  

Now, let’s discuss if the latter will ever replace the former.

What Would Replacing Cash Mean for Society?

Let’s imagine a future where cryptocurrencies replace cash in terms of transactions and overall value. 

In our imaginary future, cryptocurrency has a market capitalization exceeding US$20 trillion, and nearly everyone has a cryptocurrency wallet on their phones.