Will Fiat Money Disappear in 10 Years? | Economist Dawie Roodt on Money, Inflation & Bitcoin

The VALR Podcast returns with another thought-provoking discussion, this time featuring Dawie Roodt, a renowned economist and one of South Africa’s most referenced financial minds. In conversation with Farzam Ehsani, Roodt explores the origins of money, the role of central banks, the future of fiat currency, and the rise of cryptocurrencies.

From Barter to Money: The Foundations of Trade

Before the advent of money, societies functioned on barter trade, a system riddled with inefficiencies. The breakthrough came with the recognition of private property rights, allowing individuals to own, trade, and ultimately use money as a medium of exchange.

“Trade is essentially the exchange of ownership,” Roodt explains. “And ownership is information. The development of money was one of the greatest economic inventions, making trade more efficient and economies more productive.”

Initially, precious metals such as gold became the standard form of money, solving the divisibility and portability issues inherent in barter. Gold allowed individuals to store value over time, facilitating long-term economic planning and wealth accumulation.

The Rise of Fiat Money and Central Banks

Over time, money evolved into paper currency, initially backed by gold but later detached from it entirely. The pivotal moment came in 1971 when U.S. President Richard Nixon abandoned the gold standard, introducing the era of fiat money—currency backed only by trust in the issuing government.

Fiat currency, as Roodt explains, is upheld by two key pillars:

• Trust in central banks – The belief that monetary authorities will manage the currency responsibly.

• Legal enforcement – The requirement to pay taxes in the national currency, creating constant demand for it.

However, history has shown that governments frequently undermine their own currencies, often through excessive debt and inflationary policies.

Inflation: The Silent Wealth Eroder

One of the most significant drawbacks of fiat money is inflation, which systematically erodes purchasing power. Roodt describes inflation as “money losing its value,” rather than simply an increase in prices. This process disproportionately affects lower-income individuals, who lack the assets to hedge against currency devaluation.

“In a free market, prices send signals about supply and demand,” he notes. “But in an inflationary environment, those signals become distorted, leading to misallocation of resources and weaker economic growth.”

Bitcoin and the Future of Money

The discussion then shifts to the emergence of cryptocurrencies, particularly Bitcoin, as an alternative to fiat currency. Originally viewed as an obscure digital experiment, Bitcoin has now gained mainstream acceptance as a store of value and a potential hedge against inflation.

Unlike fiat money, Bitcoin has a fixed supply—only 21 million coins will ever exist. This scarcity, combined with its decentralised nature, has led many to see it as a viable alternative to traditional currencies.

Roodt acknowledges both the promise and the challenges of Bitcoin:

• The lack of a secondary credit market – Unlike traditional currencies, Bitcoin does not yet have a fully developed lending ecosystem, limiting its ability to expand and contract with economic activity.

• Its volatility – Trust in Bitcoin has grown over time, but its price remains highly unpredictable.

However, he believes that continued development in the crypto space, including smart contracts and financial derivatives, will help stabilise the market and increase its utility as a form of money.

Central Bank Digital Currencies (CBDCs) vs. Decentralised Crypto

With governments now exploring their own digital currencies, the future of money appears to be at a crossroads. Roodt predicts that in the coming years, we will see the rise of central bank digital currencies (CBDCs), with major economies like the U.S., China, and the EU leading the charge.

However, he warns that CBDCs introduce significant risks, particularly in terms of government control and financial surveillance.

“If central banks can programme money, they can dictate how you spend it,” Roodt cautions. “They could prevent you from buying certain goods, impose negative interest rates, or even freeze your funds if you criticise the government.”

On the other hand, private sector digital currencies, such as Bitcoin, provide a counterbalance by offering individuals financial sovereignty and protection from government overreach.

The Decline of Fiat: How Soon Will It Disappear?

Roodt believes the world is moving towards a post-fiat era, with traditional money gradually being replaced by digital alternatives. He predicts that within the next decade, fiat currencies will either disappear entirely or transition into CBDCs.

“Fiat money is on borrowed time,” he asserts. “We are witnessing the beginning of a financial revolution where people are no longer forced to trust government-issued currency.”

A Future Without Borders?

Beyond currency, Roodt envisions a world where governments themselves may become less relevant. Historically, nation-states were defined by physical territory and control over economic activity. However, with digital economies, decentralised finance, and cryptocurrencies, individuals now have more mobility and autonomy than ever before.

“If money can exist independently of governments, why can’t societies?” he asks. “We could see the rise of network states—communities bound by shared values rather than geographical borders.”

Final Thoughts

The discussion with Dawie Roodt underscores the dramatic shifts occurring in global finance. As trust in traditional institutions declines and digital assets gain prominence, the monetary system is undergoing a profound transformation.

While central banks are trying to maintain control through CBDCs, the emergence of decentralised alternatives like Bitcoin presents a compelling alternative. Whether at a national, corporate, or individual level, the choice of currency is becoming a strategic decision rather than a passive one.

As Roodt aptly puts it: “The question is no longer whether fiat will survive, but rather, how soon will it disappear?”

Stay tuned to the VALR Podcast for more insightful discussions on the future of money, technology, and financial sovereignty.

Risk Disclosure

Trading or investing in crypto assets is risky and may result in the loss of capital as the value may fluctuate.

VALR (Pty) Ltd is a licensed financial services provider (FSP #53308).