Cryptopia or Fiatland?

Treasury and Trade Solutions Treasury and Trade Solutions Over the past decade money has evolved rapidly. Physical cash and cheques are disappearing; money is becoming digital, real time, and frictionless. Multiple technologies are facilitating this process – and are vying for the future of money. The consequences of the changes taking place in the world of money are significant for regulators, market participants and users. The debate about change is dominated by two camps. The first advocate cryptocurrencies, where value is secured by cryptography and underpinned by distributed ledger technology (DLT) such as blockchain. The frictionless peer-to-peer Cryptopia does not require trust or costly financial intermediaries; transactions are instant, private and anonymous. Crypto-enthusiasts believe that the advantages of decentralised networks will make existing currency systems redundant. Their ideas have already entered public and policy discourse. The second camp – fiat currency supporters – are dismissed by some as the status quo. Certainly, proponents of Fiatland, where currency value is based on trust (in governments), refuse to concede fundamentals such as anonymity and privacy given the need to prevent money laundering. However, technology is enabling fiat currencies, and structures focused on countries and banks, to become more effective: Fiat 2.0 is emerging. Fintechs are working to build next generation consumer wallets on top of new real-time banking systems. Cryptopia or Fiatland? Tony McLaughlin Emerging Payments and Business Development, Treasury and Trade Solutions, Citi “Cryptopians embrace an alternative money system where value is based on computer code” There are two rival visions for the future of money. Will cryptocurrencies replace fiat currencies? Can our existing fiat money system adapt to new ideas? Is a synthesis possible?