In early 2021, 1 bitcoin was valued at over $33,000, which was the highest it’s ever been. Most experts agree that cryptocurrencies are not only here to stay, but also become the main currency in the future as well.
Understandably, this has caused some to rethink and criticize government-issued currency, or fiat currency. In fact, some even think that the end of fiat currency might be somewhere in the near future.
So will fiat currency collapse? Read on to find out.
Fiat Currency Collapse History
To understand whether a fiat currency collapse is possible in the near future, we should first take a look at the history of these collapses.
Societies with fiat currencies that have collapsed include Ancient Rome, Germany after WWI, Argentina in the 1970s, and Zimbabwe in 2008.
What all of these have in common is that they’ve printed more money in response to inflation. That only served to ruin their fiat currencies.
Fiat Currency Analysis
In truth, even if they haven’t collapsed, fiat currencies have never been able to hold their value for a long period of time.
For instance, let’s take the British pound and the US dollar. The first is the longest-reigning fiat currency and the other is the most commonly used one.
In both cases, they have lost at least 90% of their value over time. Yet today, they’re still two of the most valued and used currencies.
Because the US dollar is such a key currency used all over the world, experts don’t think we should worry too much about the collapse of this fiat currency. The global consequences would be too catastrophic.
So before that’d happen, the more likely outcome would be backing of currency with physical commodities. Some commons ones are gold and silver.
For this reason, you’ll want to keep up on pricing for these precious metals. They might even be good avenues to invest in, as prices are actually increasing significantly right now, while fiat currencies are decreasing in value.
Fiat Currency Collapse: Will It Happen?
There’s always a chance of a fiat currency collapse, especially if inflation’s involved. As we’ve seen, fiat currencies have continuously risen and fallen. And if they’ve managed to stick around, they’ve become extremely devalued.
But if the government can learn from past mistakes, there’s better hope of them fighting off a possible collapse. Also, the fact that the US dollar is commonly used worldwide might save it from any demise.
Be Smart in Your Investments
In any case, it seems like cryptocurrency is gaining traction, so it wouldn’t hurt to invest in some if you’ve got the spare cash. Having some gold or silver might be a good idea too.
By not having all your eggs in one basket, you’ll be better prepared should an actual fiat currency collapse happen.
Now that you’ve gotten clarity on the question “will fiat currency collapse,” keep learning about finances and cryptocurrency by browsing the rest of our site.