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P1The emergence of cryptocurrencies has prompted bold claims about the imminent obsolescence of conventional money. I disagree with the proposition that digital currencies could replace traditional ones in any near or medium-term future, and I believe the structural barriers to that outcome are more formidable than their proponents typically acknowledge.

P2The appeal of decentralised currency is genuine and not without intellectual basis. Cryptocurrencies remove the intermediary of central banks, enabling peer-to-peer transactions across borders without the fees, delays and political vulnerabilities associated with conventional transfer systems. In countries whose national currencies have undergone severe inflation or political manipulation, access to an independent, algorithmically bounded currency represents a meaningful protection. Bitcoin and similar assets have demonstrated that large-scale digital value exchange is technically feasible.

P3However, the characteristics that make a currency useful for everyday commerce are precisely where cryptocurrencies remain weak. Price stability is the precondition of a functioning medium of exchange; a currency whose value can halve or double within weeks is better understood as a speculative asset than a transactional instrument. The energy consumption of proof-of-work networks raises serious environmental objections. The regulatory environment surrounding cryptocurrencies is fragmented and unpredictable, deterring the institutional adoption required for mainstream use. Most fundamentally, governments control taxation and must be paid in national currencies, which anchors demand for conventional money in a way that no competitor can easily displace.