I have heard many people (let’s call them crypto maxis) talk about a world where fiat will be defeated and cryptocurrencies will reign supreme. In this future dreamland, the dollar and euro will have no value because they are controlled by a few powerful people and establishments.

In the cryptoverse, only cryptocurrencies will be spent and the supply is decided by all members of the community. This sounds like a brilliant plan that democratizes all aspects of our lives and gives us full control.

But is it?

Let’s step back for a moment.

Bitcoin, the most popular crypto, came with the promise of replacing fiat with a digital currency on the blockchain that promotes transparency. Because of its fixed supply, it cannot be manipulated to produce more copies and, since it is completely community-regulated, no one can singularly decide its future.

This sounds all nice and good. But we’ve seen over the years that it is simply not true.

While early adopters were small players who believed the project despite the anonymity of its creator, in recent years we’ve seen the influx of institutional and governmental players who continue to buy up large sums of the currency - enticed by the continuously rising prices.

Because of their large holdings, these players have significant power to manipulate the trading price of bitcoin - generating demand to push prices up before selling huge quantities to take profit, resulting in price crashes. While volatility is expected, the amount of volatility in cryptocurrencies is not sustainable.

Surely, many will make money from these sudden price movements, but many are also ruined by it - unable to stay in the game for long when prices decline significantly.

Also, there is the problem of control. Although decentralization sounds sweet to the ears, we ultimately as humans want some order. Without order, we cannot make sense of our world.

Today, we have thousands of crypto ‘projects’ all propped up to kill fiat and topple the present order. Yet, these projects lack any fundamental purpose. In fact, people are only attracted to them because of the promise of making a quick buck. The chance of a 1,000,000 APR/APY is enticing to the regular person and they will quickly stake their $100 to risk it.

But we’ve seen plenty of disappointments. The craze continues because it drives hope. Retail investors on the hunt for a chance to quickly flip their monies will continue to take uncalculated risks and lose out. Yet, they will not stop because they see new posts of people turning $10 into $100k in 6 months.

What’s my point, you may ask?

Decentralization is good, but I believe that the use case of cryptocurrencies is the transparency of the blockchain. While we continue to grow this industry (still small compared to the stock market), there will be big financial hits for early adopters and also significant losses.

Yet, the goal isn’t to make money or replace fiat. Indeed, we still need a sense of the value of cryptocurrencies - hence the importance of fiat. For example, how many ETH should you exchange for one XTZ? Without referencing the dollar value (fiat!), it is impossible to compare the value of cryptocurrencies.

And this is where centralization comes back in. Since we have a significant number of cryptocurrencies, fiat will continue to be relevant for comparing value. Otherwise, we end up in chaos and lose the sense of value, which makes exchange impossible.