Phil Kwok, co-founder of EasyA, shared his thoughts on significant changes in global finance regarding cryptocurrencies and fiat currencies.
Inflation and the Weakening of Fiat Currency
For decades, fiat currencies like the dollar, euro, and pound have served as reliable stores of value. However, recent years have shown sustained inflationary pressures undermining confidence in them. While inflation has cooled from the peaks of 2022, it remains above target levels set by central banks in many economies. This negatively impacts the purchasing power of fiat currency, making it less attractive to long-term investors. Kwok points to the growing interest in assets that are not subject to constant monetary expansion.
Arguments for Scarce Cryptocurrencies
Scarcity lies at the heart of Kwok's argument. Cryptocurrencies such as Bitcoin, capped at 21 million coins, and XRP, which has a fixed supply of 100 billion tokens, stand in stark contrast to fiat currencies, which can be expanded indefinitely. This feature makes digital assets appealing as a hedge against inflation and currency debasement.
Skepticism in the Crypto Space
However, such remarks raise important questions. While major assets like Bitcoin and XRP have hard limits, the crypto ecosystem continues to see the creation of new tokens. Inflationary models or minting tokens to incentivize participation can be observed in many projects. Critics argue that cryptocurrency could replicate the same dilution tendencies as fiat, but the key difference is that investors can distinguish between capped-supply projects and inflationary ones.
Thus, according to Kwok, the recognition of the weaknesses of fiat money and the advantages of scarce cryptocurrencies could significantly alter the financial landscape. Such changes will depend on how quickly institutions, regulators, and individual investors respond to these shifts.
