Cryptocurrency is here to stay. The market is still extremely immature and has it’s dips, but it’s pretty clear at this point it’s not going to disappear.
The other day I was talking to a friend and formulated a theory about how I think cryptocurrencies will eventually become integrated into daily life. I have already written previously about how I think Ripple will take over the traditional banking industry, but I believe that is only the start.
I foresee a future where every major corporation distributes it’s own cryptocurrencies. Most likely (but not certainly), these coins will be 100% pre-mined, and sold similarly to how gift cards are sold currently.
The benefit of this would be that companies can control the distribution of their own currency, thus pricing their merchandise and services at a fixed amount.
For an example, we’ll use Walmart. We’ll say that hypothetically, Walmart announces they are launching a cryptocurrency called SamCoin. You can purchase SamCoin at whatever price they decide to sell it on the market, and all the products at Walmart will be tied to a fixed price in SamCoin.
As many of us know, the US Dollar is deflating at a rate of about 3% per year. This means as a result, prices have to rise 3% in USD. BUT in this hypothetical, it’s only necessary to raise the prices in USD, but they can remain the same in SamCoin. All they would have to do is sell SamCoin for about 3% more in USD every year.
Why would they do this you may ask?
1) Fund raising. Ripple Labs is proof that a company can raise money by selling tokens instead of equity. This could be a game changer, as business owners can keep 100% of their ownership. For companies that are already incorporated, this gives them a method to buy back shares.
2) Customers save money. If someone expects to continue shopping at Walmart, why wouldn’t they buy SamCoin? They will lose 3% year holding onto USD, but if they have SamCoin they can preserve their purchasing power over the years. Worst case scenario, they decide they no longer want to shop at Walmart, and they sell their remaining holdings on an exchange and probably get back more than they paid in USD.
3) In the case of USD hyperinflation, they can continue to operate. We’ve seen it happen many times through history, when a national currency hyperinflates, it makes it extremely difficult for businesses to operate. How do you set prices when the currency you use is losing 5%-10% per day? In this scenario, all they’d have to do is suspend purchases in USD (much like businesses do when Bitcoin price is volatile or fees get too high) and deal solely in their own token.
4) Security. Most big companies already have loyalty points, gift cards, or some sort of rewards program. These systems are not exactly technologically secure, and get abused often. Why not adopt a technology that is almost immune to abuse, and allows companies to actually SAVE money?
It seems obvious that this is the natural progression that cryptocurrency will go through. It’s not a matter of if in my opinion, it’s a matter of when.
So what’s holding them back from doing this? I think one of the factors is that as of right now, there is no easy way to create a SECURE cryptocurrency with a 100% pre-mine, outside of the Ethereum platform. Another thing holding the big money back from entering the market is the US government taking it’s time to decide whether to declare cryptocurrencies a security or not.
The market desperately wants a stable currency, and this is how it will manifest while still abiding by the law. I don’t believe the USD will ever disappear entirely, but cryptocurrencies will make it totally obsolete over time, and serve as a way to protect both consumers and businesses when it inevitably hyperinflates .