Predicting the Evolution of Currency

Image by Marco Verch Professional Photographer Via flickr

Predicting the Evolution of Currency: From Tradition to Digitalization

Predicting the Evolution of Currency by 2030

By William (Will) McMillan

Currency, our universal medium of exchange, has seen a dramatic evolution—from bartering, minting coins, and paper money to the digital and cryptocurrency era. This piece will succinctly explore the current state of currency and provide a glimpse into its potential transformation by 2030, charting its continuous journey of change and tech-driven progression.

The Present State of Currency

As of 2023, physical cash in circulation worldwide approximates $40 trillion, a figure that swells to roughly $90.4 trillion when considering broader monetary aggregates including bank deposits and other financial instruments. In the U.S., As of the week of May 17, 2023, U.S. currency in circulation was at a level of $2.334 trillion, a decrease from previous years due to the digital economy's expansion. The number of outstanding U.S. $100 bills has passed the number of $1 bills in circulation​, showcasing the changing tendencies in storing and saving money.

Meanwhile, "plastic money," such as debit and credit cards, and online payment platforms shape today's transaction landscape. Despite their associated risks like fraud and overspending, these mediums promise safety and ease, underscoring our increasing internet dependency. However, these digital platforms also face challenges related to security, privacy, and reliable internet connectivity.

Annual volatility of BTC

Annual volatility of BTC  by Ladislav Mecir, CC BY-SA 4.0, via Wikimedia Commons

As 2022 ended, Bitcoin demonstrated uncharacteristically muted price movements, reaching its lowest volatility levels since 2020. The seven-day annualized volatility of Bitcoin fell to 10.64%, a far cry from its average volatility of 56.85% since 2013.

This relative calm contrasted with Bitcoin's history of notable price fluctuations, like the meteoric rise from around $1,000 to almost $20,000 in 2017, and the leap to nearly $70,000 in 2021, followed by subsequent sharp declines. In the last few weeks of 2022, Bitcoin traded between $16,000 and $17,000, a narrow range given its historical price movements.

The year was marked by upheaval in the crypto space, with incidents like the failure of the FTX exchange and the terraUSD stablecoin losing its peg to the U.S. dollar contributing to a substantial decline in Bitcoin's price.

Despite their exciting potential for decentralization and security via blockchain technology, cryptocurrencies like Bitcoin and Ethereum are still grappling with issues of price volatility and regulatory concerns. As we move into a new year, it will be interesting to monitor how these challenges shape the evolution of cryptocurrencies.


Stanjourdan, CC BY-SA 4.0, via Wikimedia Commons

The Emergence of Digital Currency

Digital currencies offer potential transformative benefits, particularly for lower-income and emerging economies. They could democratize financial services, extending access to the 1.7 billion people worldwide without traditional bank accounts. The adoption of CBDCs could result in the retention of around $30B in emerging nations and payment speeds would also increase due to digitalization and the removal of intermediaries.

However, the transition necessitates careful regulation to mitigate risks, including potential digital exclusion and fragmentation. The lower costs of obtaining, storing, and spending digital money could make it easier for people and companies to substitute their domestic currency with a more stable currency, especially in countries with high inflation and volatile exchange rates. At the global level, a smooth rollout of CBDCs in center countries requires international coordination.

The International Monetary Fund (IMF) can play a pivotal role in this transition, ensuring stability and inclusion. As we embrace this digital revolution, careful management and international cooperation are crucial for leveraging its immense opportunities.

Emergence of Digital Currency

B140970324, CC BY-SA 4.0, via Wikimedia Commons

Cryptocurrency and Blockchain

Cryptocurrencies do have the potential to foster global financial inclusion by providing low entry barriers, enabling cross-border transactions, offering access to credit, empowering the unbanked, and acting as a store of value. They are especially promising in developing countries where they can help break down barriers to economic empowerment for the unbanked population. The crypto economy is leading to the development of an alternative financial and technological infrastructure that is global, open source, and accessible to all who have access to the internet​.

However, there are significant challenges that need to be addressed. Security concerns are paramount with cryptocurrencies being susceptible to scams and fraud. Regulatory standards are currently lacking, with the Securities and Exchange Commission (SEC) and other regulatory bodies struggling to keep up with the rapid pace of development in the crypto industry. This has led to some confusion and a lack of clear guidance on how certain aspects of the cryptocurrency market, like tokens, should be regulated. Until the crypto industry becomes a part of the regulated economy, it might continue to be associated with criminality​​.

Blockchain, the technological backbone of cryptocurrencies, transcends its digital currency application. It has the potential to revolutionize diverse sectors such as healthcare, supply chain management, and governance, among others.

However, security concerns, regulatory standards, and public adoption hurdles must be overcome to harness this potential.


By Jernej Furman via flickr

Central Bank Digital Currencies (CBDCs)

Central Bank Digital Currencies (CBDCs) are digital forms of sovereign currencies with the potential to reshape the financial system. By improving efficiency, inclusivity, and financial stability, CBDCs aim to retain central control, unlike decentralized cryptocurrencies.

Currently, several countries, like China and Sweden, are piloting CBDCs. Global acceptance remains to be seen, yet the potential benefits might propel further exploration and adoption. Despite the positives, CBDCs face significant challenges such as privacy, security concerns, and the risk of increased government control.

The Role of Big Tech in Future Currency

Big tech firms are making notable strides in the financial sector, revolutionizing payment systems with technological innovations. While these advancements present promising potential, they also trigger concerns about market dominance and regulatory complexities.

Regulatory entities globally are wrestling with big tech's foray into finance, striving to strike a balance between fostering innovation and safeguarding consumers and market competition. Future regulatory dynamics will indubitably sculpt the digital finance landscape.

Monito - Money Transfer Comparison

Monito - Money Transfer Comparison, CC BY 2.0, via Wikimedia Commons

Anticipating Changes in Consumer Behavior

Consumer behavior is anticipated to shift considerably in 2023, becoming more selective, digitally savvy, and value-focused. Despite potential economic concerns, consumers' accumulated savings and new experiences from the pandemic era will drive increased spending. Blending novel digital methods with traditional practices, consumers will seek out experiences that deliver maximum value.

These patterns align with the growing global adoption of digital payments, demonstrating trust and reliance on technology. By 2030, digital payments are expected to reach $5,848.5 trillion in terms of transaction value. The adoption of digital payments will be supported by the high level of convenience offered as they allow users to make transactions quickly and easily from anywhere at any time2.

However, these trends will be subject to tech accessibility, financial literacy, and regulatory structures.

In Conclusion

In conclusion, as we approach 2030, the landscape of currency is poised for transformative changes. Developments in technology, the burgeoning field of cryptocurrencies, the advent of Central Bank Digital Currencies (CBDCs), and the increasingly influential role of big tech in finance herald a future that could revolutionize our financial transactions and redefine the concept of money itself. However, to harness this potential, we must tackle the significant challenges of technological complexities, security concerns, and regulatory requirements. The future of currency is indeed optimistic if we can navigate through the bureaucratic intricacies and human differences. Appreciating the trajectories of these currency evolutions will equip us to engage with these imminent changes and play a role in crafting a financial sphere that is inclusive, secure, and efficient.



Written by William (Will) McMillan for