easier, faster, and cheaper. Thus, over-intermediation in finance has been highlighted by Blockchain

emergence. Here, a SWOT will be carried out to examine Blockchain and cryptocurrencies, their monetary

role, their impact on a financial system based on banking intermediation, and their influence on the future of

central banking. About the United States, this paper concludes that cryptocurrencies will eventually spread as a

method of payment, which could lead them to be the new form of money under some assumptions. The

eventual adoption of blockchain technology by central banks through the introduction of official digital

currencies could favor the creation of a more inclusive financial system in the future.

Key-Words: - Methods of payment, Blockchain, cryptocurrencies, fiat money, financial system, central

commercial exchange; it is widely known and

accepted due to its liquidity. Hence, money is the

source and not an outcome of the financial structure.

the development of money to occur. A free market

in money is likely to produce something preferable

to that which is state-issued, given that if the money

produced by the free market does not adequately

serve the needs of exchange, then it can be quickly

replaced with another form”, [1]. Therefore,

valuation process since their emergence in 2009.

However, none of the above mentioned is relevant

made many lose sight of the endgame value of such

CCs”, [2].

would be fully available, opposite to commercial

money, [4]. Furthermore, it is important to

acknowledge that CBDCs are created or destroyed

by central banks, opposite to private

cryptocurrencies, which are issued by the

computational capacities of miners, [5].

route to solve problems presented in CCs, such as

research is the United States, considering its role as

a technological innovator and economic leader, in

addition to the importance of the US Dollar in the

financial system. The role of the US dollar as an

international reserve currency, as well as the role

played by the US Justice Department, the Internal

Revenue Service (IRS), The Securities and

Exchange Commission (SEC), and the Commodities

and Futures Trading Commission (CFTC), which

payment, its implications for the centralized

financial system, and the role of financial mediators.

Accordingly, the research questions are: (I) What do

Blockchain, and CCs offer to improve the financial

system? and (II) Have CCs the potential to replace

fiat in finance? Correspondingly, the hypotheses

are: (1) Blockchain technology offers an alternative

for financial dynamism that is more direct, cheaper,

faster, and safer with less bureaucracy, which might

contribution to the academic discussion is that it

promotes the understanding of the potential

disruption of Blockchain in financial intermediation,

from an institutional point of view. This paper also

analyses the central banking role and the

adjustments that might lead to restructuring

centralized finance, which should provide free

Alternative options such as Blockchain, “has the

illicit activities and cybersecurity, monetary

sovereignty, private banking, and the intermediation

innovative business models, financial inclusion, and

Central Bank Digital Currency.

revolutionary instrument to achieve

inclusion, transparency, trustworthiness, and

reliability”, [9], which might provoke a substantial

reduction in transaction costs, favoring the

operational process, while decreasing risks and

timing of cross border transactions. Hence, offering

added value through innovation to the financial

exchange.

milestone since understanding CCs as a means of

exchange and accepting their monetary nature

entails recognizing a potential change in digital

payment structures.

of the most promising types of electronic money is

CCs described as the latest “form of presenting the

money we use in everyday life”, [15]. Due to its

performance, in 2021, 59.59% of the crypto owners

in the U.S. claimed that the main use of their

ownership was purchasing, whereas the other

40.41% kept them only as investments. In contrast

to 2020 as it is displayed in Figure 1, the

“investment-only” decreased sharply granting space

to grow for purchasing purposes, [17]. Due to this

trend, around 2,352 US businesses accepted Bitcoin

in 2022, [18].

risk, all by means of traditional educational channels

and social media.

where demand drives them, and here’s a situation

stance rather than reactive, the change and the

orientation of the market and many public actors

award a bright near future for CCs as a broadly

accepted method of payment.

4.1 Mining and Environmental Concerns

exposed to significant valuation risk, epitomized by

the collapse of Terra in May 2022”, [23].

weakness, since it affects the construction of the

most important characteristic of payment

the public in their ability to pay back any debts

owed by them” [10]. The relevance of CCs relies on

a new financial world. However, this Crypto world's

are a bubble that will sooner or later fully implode.

To others, they will prove the foundation for

fundamental innovations in decentralized finance”,

[23].

process transactions and their processing times;

secondly, the income, age, and academic

characteristics of CC owners in the U.S. and how it

affects CCs penetration into the market, which

provokes fewer use commercial transactions.

technological drawback of blockchain technology.

Despite its exponential increase and wide

acceptance as a method of payment, it currently

requires up to an hour to process a successful

quantity of transactions needed to maintain the

current economic dynamism exceeds by much

Bitcoin’s capacity.

small percentage of the population makes it more of

an investment rather than a currency, so it weakens

its positioning as a method of payment. If CCs are

not in constant use and exchanged to purchase

Fig. 4: CC owners by education level in the U.S.

2022

Source: [25] and own elaboration

Fig. 5: CC owners by age in the U.S. 2022.

Source: [25] and own elaboration

security is granted by the decentralized information

system in all nodes, which makes it virtually

impossible for hackers to cause significant damage

to its accounting system. Consequently, hackers do

focus on attacking users rather than the system,

hence they seek to control personal information to

access private keys. When keys are exposed,

attacked, affected account holders can complain to

request the reintegration of stolen funds.

activities and cybersecurity concerns must be

considered for investing, trading, or regulating CCs

since these issues impede the settlement of CCs as

methods of payment. Therefore, they represent a

potential threat not only for users but also for the

technology itself. Consequently, to advance in the

CCs development, deep research should be

5.2 Monetary Sovereignty

Monetary sovereignty is an attribution of the State,

appointed to the economic regulatory power or the

central bank. Nonetheless, there are other relevant

regulations worth mentioning such as commercial

rules, taxes, prohibitions of illegal monetary

activities, or fiscal policies, which have a direct

impact on the economic dynamism as well, [27].

Consequently, States such as China in April 2020

and, even the European Union, have declared their

intentions to launch their digital currencies, [30].

it could change the direction of CCs, perhaps

dismantling their private characteristic, but

presenting numerous reforms in the structure of

private banking.

who will get to control these technologies” [1].

overcome the prevalent issues with traditional

currencies by giving control back over to the

currency holders as opposed to a monetary

authority”, [31].

Blockchain will perhaps become the channel where

“all financial transactions will occur”, [10]. Hence,

the channel where CCs operate must be explained,

since not all transactions in blockchain occur peer-