One of the common use cases put forth by cryptocurrencies (and teams) is that it is a 1:1 replacement for fiat currencies.

Some reasons are:

  • No government authority decides how the currency is governed;
  • Transactions of cryptocurrencies are immutable on the ledger and can be trusted;
  • Have lower transaction fees (if not exchanging back to fiat); and
  • Can be used anywhere.

These reasons make for very broad theories that it could one day, replace fiat currency as a whole with an overriding weight on its decentralized governance.

I don't think this will happen. Rather, cryptocurrencies may spur fiat currencies to iterate and force financial institutions to become more competitive. But what I think is likelier to happen is that the definition between cryptocurrencies and fiat currencies will start to converge until the distinction itself becomes meaningless.

And we are already starting to see the signs. Fiat backed cryptocurrencies like Tether (USDT) and TrueUSD (TUSD) are essentially crypto representations of fiat, and some banks are already adopting bitcoin, not wanting to be left behind in the shift of value.

So convergence is already happening. Yet, cryptocurrencies are still far away from being adopted as a ubiquitous mode of payment and risk being left out altogether. If the potential to replace fiat currencies can create this effect, it is highly probable that if cryptocurrencies to move away from speculative value to fundamental value and functional utility, with a competitive edge against fiat-based payment solutions that we may see a wave of adoption that everyone has been anticipating for years. Fiat currencies have deep infrastructural roots that make it hard for anyone to swap cold turkey to cryptocurrencies completely. If fiat currencies do not keep up, the risk of being replaced becomes quite real as value transfers from fiat to crypto.

Gaining a competitive edge against fiat-based payment solutions is key to effecting cryptocurrency adoption. For everyday payments and transactions, fiat currencies are still ahead in ease of use and benefits. Very few cryptocurrencies besides ITCO has a plan to compete against fiat payment solutions by introducing credit-card like benefits.

ITMF plans to do this by partnering with commerce businesses with ITMF crypto-funds, and allowing them to use a portion of it to reward their customers when they pay in ITCO. This creates a unique, mutually beneficial arrangement where the customer is rewarded with benefits, the commerce business partner's cost of running the reward program is reduced and ITMF generates revenue from the crypto-fund. Every successful commerce business has a unutilized running capital that could be leveraged and ITMF wants to help commerce businesses take full advantage of that.

The strategy of partnering with commerce businesses allows ITCO to stay relevant against other cashless payment solutions like ApplePay, SamsungPay or any other 'Pay', and gives ITCO the payment exposure it needs to truly become a global currency that can stand along side traditional fiat currencies.