The most important properties of a CryptoCurrency and why crypto cannot compete with Fiat/USD today. [Thoughtful Discussion]

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The dream of bitcoin, at least originally, was to become a spendable currency. One that could replace the use of government fiat currency. However, today there are not cryptocurrency that are realistically good enough to be used in place of standard USD debit cards or cash. So what properties would a cryptocurrency have to have in order for me to be able to stop using USD almost completely? I will attempt to build a list. The lack of any 1 of these properties would make it very, very difficult to replace USD completely.

  1. Ownership/Control/Security – it must be in my control, like bitcoin. Not custodial, like PayPal. Many cryptos offer meet this requirement as it's perhaps the main benefit of crypto.
  2. Cheap to use – I pay minimal transaction fees when using USD to buy things, I wouldn't want to switch to something that's much more expensive.
  3. Easy to Use/Spend – Mobile wallets are important here, because I can't bring my PC and Hardware wallet to the grocery checkout. Must be comparable to Apply/Samsung pay
  4. Instant Settlement – I'll lump in Transaction times and TPS together here. If my transaction isn't final nearly instantly, I just can't to use it to replace USD at the checkout.
  5. Financial Privacy – nobody knows the balance of my bank account or my transaction history when I use USD, and I wouldn't use a system where that info public. Nearly all coins fail this one.
  6. Stable value (or increasing) – When using USD, I know how much purchasing power I have. If I have enough money in my account to pay my rent, then the next day I don't. That's a problem.

There are no cryptocurrencies in existence in existence today that have all of the required properties listed above, and that is why crypto is a competitor to fiat/USD today.

At the risk of being downvoted for mentioning specific coins, I will provide some commentary on some existing projects that attempt to capture these important properties listed above.

  • Bitcoin – Clearly provides property #1 (security) and I would also say it's fairly easy to use (Property #3) as there are many great mobile wallets that exist. Aside from properties, bitcoin fail to provide the rest listed, so its far from being a replacement for USD, at least for me.
  • Smart Contract Coins – These, provide properties that go beyond that of traditional money and as such, is beyond the scope of this discussion. For the purposes of this discussion, Ethereum offers similar properties to that of Bitcoin, but the 12 sec transaction times (soon to be 2 sec) is a plus for property #4. The ability to use smart contracts to do Zcash-like transaction on Ethereum also adds a positive mark for property #5, although far from what Monero can provide.
  • Privacy Coins
    • Monero – I would say that Monero offers the same properties as Bitcoin, #1 and #3 (I've found the mobile wallet very easy to use) but with the added benefit of privacy (#5).
    • Zcash – Similar properties to Monero, but with added negatives (in my opinion). The 20% dev tax and high inflation is an addition negative mark for #5 (stable value). The trusted setup could be seen as a negative mark for #1 (security), and the opt-in privacy is a negative for #5 (financial privacy).
  • Stable Coins
    • USDT, USDC, TUSD, etc. – These stable coins are among the few crypto projects that are able to provide property #6 (stable value). However, in doing essentially giving up property #1, as these coins are backed by a 3rd party company who olds the underlying assets.
    • DAI – The stable coins stands out above the rest due to the fact that it is the only crypto project that can provide both properties #1 and #6. As a decentralized stable-coin, there is not 3rd party custodial.
  • Instant transaction coins
    • Nano – transactions are literally instant, so there is no waiting for confirmations. However, to achieve this the DPOS consensus algorithm is used, which can be seen as a negative mark against property #1 since most of the voting power is held by just a few accounts. Also worth noting transactions are competely free, although I don't think this is so important, since many coins have fees so low that they are practically free as well.
    • IOTA – Very similar properties to Nano in that transactions are free and instant. But again, like Nano, (#1) security is the tradeoff here, as IOTA still relies on a centralized coordinator, and even without it, the network is easier to attack than traditional PoW blockchains. Usability (#3) takes a hit here also, as you can't send IOTA to the same address twice, or it will be lost forever.
    • Dash – Due to a recent update, Dash transactions are now 100% confirmed instantly. Dash also cannot be 51% attacked, so that's a positive mark for #1 (security). They also have (on the testnet now) human readable account names which is a plus for usability #3, although only slightly since QR codes are already easy to use.

If I didn't list your favorite coin, or I am missing any projects with a unique combination of properties, please leave a comment and let me know. Obviously it's impossible for me to know everything about every project out there.

As it stands today, there are no coins in existence that provides all 6 of these required properties, and that is the reason I still use USD for my day-to-day transactions. I could perhaps even look past 1 or even 2 of these properties if they were missing. But even then, few if any crypto projects today are close to providing all or most of these properties.

In my estimation, the ideal USD replacement coin (for me) would look something like DAI + Monero's privacy + Nano's speed and feeless-ness. So for the time being, I can't ditch my debit card.

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