Will Digital Currency Replace Paper Money?

Cash is king. But its reign may be coming to an end. 

The internet changed the world. And now digital currency is changing how we function in that world. 

Pretty soon, running errands will be a thing of the past. Standing in line at a bank? No way! Paying bills in person? Why? 

And that trip to the mall? Not when you can go online, virtually see how items fit, press a button, and have them show up at your door. 

To many, the question isn’t “if” but, “When will digital money replace paper money?” 

Ask others what will replace money in the future and their answer might be simple. 


They feel cash is here to stay. 

So, who’s right? Let’s take a closer look.

What Is Digital Currency?  

Digital currency is any money or currency equivalent that exists exclusively in electronic form. 

Digital currency has no physical form—such as a coin or dollar bill—and can only be accessed, traded, and maintained over the internet. 

Also called digital dollars, this medium of exchange serves as a method of payment, a store of value, and a speculative investment. 

The Rise in Popularity of Digital Currency 

Look no further than bitcoin as the catalyst of the digital currency revolution. 

Created in 2009, bitcoin was the first cryptocurrency. It sought to decentralize peer-to-peer transactions and put the power of money back in the users’ hands. 

Having proved useful as a method of payment and profitable as a speculative investment, Forbes magazine named bitcoin the best investment of 2013. 

But its volatile nature led to a precipitous fall. By 2014, Bloomberg named it the worst investment.

With bitcoin, a digital currency showed it could solve problems left behind by a cash system. 

Many found digital currency useful for:

  • Financial inclusion of those without a bank or identification papers.
  • Reducing transaction fees.
  • Easier implementation of monetary policy by central banks.
  • Simplifying cross-border transactions.
  • Speedier transactions.

Will the digital dollar replace cash for all these transactions? Probably not, but it is a proven and viable option to consider.  

Advantages of Digital Currency over Cash 

The heart and soul of digital currency is its ability to put power and control into the hands of the user. 

The blockchain platform powering digital dollars gives users the advantages of:

  • Decentralization
  • Fast payments
  • Minimal fees


Digital currency typically runs on a decentralized blockchain

No intermediary—such as a bank or financial institution—is necessary to vet, administer, or complete a transaction. 

All parties agree  upon the terms of the transaction, and the blockchain verifies, authorizes, and distributes. 

The decentralized blockchain sends no offline identifiable information to the participants. 

Transactions are virtually anonymous and include only the parties involved.

Fast Payments

Transactions complete almost instantly through the blockchain. 

With no intermediary having to verify, authenticate, and distribute, digital currency payments complete with the push of a button. 

Traditional money transfer methods take days to clear. Wire transfers typically take a day. 

Digital currency reduces that time to almost nothing. 

Minimal Fees

Digital currency transactions typically cost less than cash transactions. 

There are no salaries to pay, no handling costs, and no security companies to employ.

For a digital currency like bitcoin, the transaction fees are built in.  

Others, such as ethereum, charge a small “gas” fee paid with the crypto’s token, ether. 

Challenges Digital Currency Faces 

Digital currency faces many challenges. 

Detractors ask, “How will digital currency replace money if the risks aren’t alleviated?”

Here are some hurdles facing digital dollars.


The market value of digital currency is largely propelled—up and down—by consumer sentiment. 

Sudden changes in sentiment have led to massive swings in the price of cryptocurrencies. 

Many fortunes have been made and lost on digital currency. 

If you seek stability, be sure to do your homework—and have a complete understanding—before investing in cryptocurrency. 

Security Risks

Security risks are a major concern for cryptocurrency.  

Digital currencies are held in a digital wallet. A key—a unique set of numbers, symbols, and letters—is assigned to the wallet and used to access its contents. 

If that key is lost, there is no way to access the funds. 

If that key is stolen, there is nothing preventing the thief from draining the account. 

There have been stories of people and organizations hiring massive search teams to comb through garbage dumps looking for digital drives holding the keys to wallets that contain millions in lost crypto. 

Anything on the internet can be hacked, and phishing techniques have gotten more sophisticated. 

As a digital currency owner, you must be diligent and set up secure redundancies to protect your accounts. 

Will digital currency replace paper money? Not unless these problems are addressed and fixed.

Regulatory Issues

The main tenet of digital money is that it eliminates the need for third-party control. It was built not to be contained and controlled by governments, financial institutions, or banks. 

Regulatory bodies have struggled to impose limits and legislation on something they can’t control. 

Lack of oversight and regulation can lead to fraud and lack of recourse. 

There aren’t many barriers of entry into the crypto creation market. Almost anyone can follow the process and create a coin. 

Unfortunately, bad actors take advantage of this freedom.

Instances of “rug pulls”—a scam when a crypto creator attracts investors, then pulls the rug out from under them by disappearing with the money— leave hopeful investors high and dry. 

There is no way to return the lost investment.

As governments around the world explore adopting central bank digital currency (CBDC), creating regulation is gaining more emphasis. 

Time will tell what will replace money in future, but whatever it is, it may need heavy regulatory scrutiny.

Will the Digital Dollar Replace Cash? 

Even with mass adaptation of digital currency, it’s hard to imagine a purely cashless society. 

Governments, intent on introducing CBDCs, are doing so as a complement to the current system. 

Individuals, however, find the digital dollar to be easy, useful, cheaper to transact with, and private. 

Those are hard traits to argue against. 

Ironing out its volatility, regulatory, and security issues is a must. But the trick is solving those problems while staying true to the spirit of the digital dollar. 

If not, enterprising entrepreneurs will shift the question from, “Will digital currency replace money?” to, “What will replace digital currency?”   

The Future of Digital Currency and Paper Money 

Digital and fiat currencies are here, and probably here to stay. 

As they fight it out for supremacy, take a look at something that has survived as an asset since ancient civilizations: physical gold and silver

Transfer your current IRA or roll over your eligible 401(k) into a Gold IRA or Silver IRA

These self-directed accounts give you the power of choice, diversification, inflation protection, and store of value.

For almost a decade, the team at Advantage Gold has been helping clients understand how a precious metals IRA works

We invite you to read some of the thousands of five-star reviews our clients have left us. 

Give us a call today, or contact us and we’ll call you. 

You’ll be glad you did. 

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