For more than a century, global trade and finance have relied on traditional currencies — fiat money issued and regulated by central banks. These currencies, whether the dollar, euro, sterling or yen, form the backbone of international commerce, enabling seamless transactions through such networks as SWIFT.
Enter cryptocurrencies. Over the past decade, they have evolved from a niche experiment to a trillion-dollar asset class. Bitcoin, ethereum and countless others have disrupted finance, promising decentralisation, efficiency and borderless transactions. Yet, despite their growth, global trade and investment still overwhelmingly rely on traditional banking systems and fiat currencies.
At the core of this divide are control, regulation and settlement mechanisms.
Fiat currencies operate within a structured financial ecosystem governed by central banks and regulatory bodies. Transactions settle through correspondent banking networks, where banks hold accounts with each other to facilitate cross-border payments. For instance, a South African company importing machinery from Germany settles payments via SWIFT, ensuring compliance checks at every stage. While this process takes time, it ensures transparency, security and regulatory oversight.
Traditional finance enforces strict compliance — every transaction leaves an audit trail, making it easier to track funds, detect fraud and ensure accountability. This structure, while bureaucratic, provides global stability and protection against financial crimes.
Will crypto replace traditional currencies? Unlikely. But does it have a place in finance? Absolutely.
Cryptocurrencies exist outside the traditional financial system, operating on decentralised blockchain networks. Transactions are verified by a distributed network rather than a central authority, eliminating intermediaries and reducing costs.
A bitcoin transaction, for example, is recorded on the blockchain, an immutable ledger. Unlike traditional banking, where oversight ensures compliance, crypto networks rely on cryptographic proof rather than trust in institutions.
This innovation allows for global transactions without banking restrictions, but poses a challenge — without centralised oversight, it becomes more complex to track, verify and audit transactions.
The blockchain is transparent, but wallet identities remain largely anonymous, which raises concerns; the blockchain records all transactions, but the lack of a formal audit trail makes cryptocurrencies susceptible to illicit activities. Crypto’s pseudo-anonymous nature has been exploited for money laundering, tax evasion and cybercrime. Unlike bank transactions, where institutions conduct know-your-customer and anti-money-laundering checks, crypto transactions often bypass these safeguards.
From an accounting and compliance perspective, fiat currencies remain the safer choice. Banks must keep transaction records, report suspicious activity and adhere to regulations. This accountability ensures businesses operate within legal frameworks.
Cryptocurrencies, on the other hand, lack uniform oversight. Some jurisdictions regulate crypto but globally, enforcement is inconsistent. Without standardised rules, crypto remains high-risk for large-scale commercial use.
That said, the digital nature of crypto cannot be ignored. Blockchain technology has undeniable benefits, and as regulations evolve, we may see a structured integration into mainstream finance. Central bank digital currencies are already being explored to combine blockchain’s efficiencies with traditional oversight.
Beyond investment and trade, crypto has entered the retail space. Businesses now accept bitcoin for goods and services, and crypto ATMs enable users to convert digital assets into cash. While this expands usability, adoption remains limited compared with traditional payment systems. Despite these advancements, the volatility of cryptocurrencies remains a barrier to widespread acceptance. Unlike fiat currencies, which are backed by governments and central banks, crypto values fluctuate based on market speculation. This makes pricing goods and services in crypto highly unpredictable.
Moreover, cybersecurity remains a concern. While blockchain technology itself is secure, crypto wallets and exchanges have been frequent targets for hackers. Billions of dollars have been lost due to breaches, raising questions about the reliability of storing wealth in digital assets.
So will crypto replace traditional currencies? Unlikely. But does it have a place in finance? Absolutely.
Digital assets are here to stay, but caution is needed until they face the same scrutiny, transparency and governance as fiat currencies. Businesses and individuals should approach crypto with an informed perspective, recognising both its potential and its risks.
For now, the global economy remains anchored in fiat money, with traditional banking networks facilitating most trade and investment. However, as digital finance evolves, the debate over crypto’s role will intensify.
The key lies in striking a balance — leveraging blockchain’s benefits while ensuring financial integrity and compliance. Until that happens, crypto will remain a fascinating yet unregulated frontier in global finance.
• Bezuidenhout is the founder of financial services provider BeztForex.co.za and the global trade AI platform Zynched.com
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