Many individuals perceive digital currency to be future of currency, thus its ever growing popularity. Cryptocurrency is a form of digital currency that can be used to purchase goods and services, but uses an online ledger with strong cryptography to protect online transactions. Individuals, financial institutions and governments should embrace the use of cryptocurrency such as bitcoin as they have profound benefits in financial systems. The benefits of cryptocurrency have inspired the creation of several fintech platforms to adopt or explore the implementation of cryptocurrency in addition to fiat money for economic transactions. Cryptocurrency could represent an easier and more adaptable alternative. Investing in cryptocurrency right now could not only provide you with great returns in the near future, but could also provide you with an alternative currency of use as well.
In the 2008 financial crisis, banks and other financial institutions world wide failed, showing the fragility of the financial and monetary systems, highlighting the over reliance on the institutions. Jobs were lost, livelihoods were lost, and the economy crashed; this led to growing mistrust in fiat currencies. A possible solution to avoiding such a failure of the financial systems would be cryptocurrency. The decentralized nature of cryptocurrency decreases reliance on financial institutions and fiat currencies, which would aid in avoiding such a financial crisis reoccurring. Indeed, it is evident that the trust erosion in the financial sector that was weakened by the events of the 2007/08 financial crisis, particularly in relation to banks, has encouraged the use of cryptocurrencies such as Bitcoin as an alternative form of (private) digital money.
Cryptocurrencies combine important properties to foster trust, such as transparency and accountability, which allows trust free interactions between countries. The underlying block chain technology uses hash functions, consensus mechanisms and public and private key encryption to control transactions, which ensure that the users don’t have to trust one another. The security of cryptocurrencies should encourage individuals and institutions to invest in crypto. Blockchain technology security strengthens the security behind crypto transactions.
A current issue that the world’s currencies all deal with is the issue of inflation. The current data shows that the projected US inflation rate will be above the accepted 2% at 3%. As more money is pumped into the economies in the form of stimulus checks for example, the value of the currency is devalued. The rising inflation rates will lead to increase of goods of prices, whilst reducing purchasing power of the average individual like yourself and myself. Currently, cryptocurrency has the potential to protect against inflation and rising prices. Seeing as there is a limited supply of crypto, cryptocurrency is more likely to be able to hold its value over some time, avoiding the effects of inflation. Let’s decide to reframe our point of view and look at it from the POV of an individual using cryptocurrency for a daily transaction 5-10 years from now. The value of our crypto, may be greater than that of the dollar, thus giving us higher purchasing power. This would be a great benefit to have.
A possible advantage could be the decentralization of crypto currencies is that there is no government or banks regulation. Thus, crypto currencies are not delimited to a specific geographic area and can be traded all over the world. Most cryptocurrencies have been created with the objective of being borderless and frictionless. Therefore, people have the chance to adopt of digital currency such as the bitcoin as they empower a common man in a way that they can conduct individual to individual transactions all around the world instantly without paying heavy charges to banks. Businesses will always continue to become more and more global moving forward, so a decentralized currency could aid the current businesses and even encourage the establishment of more businesses. This would just go ahead and help innovation and economic growth world wide. Decentralization ensures that the currency cannot be manipulated as how normal currencies sometimes are. Researchers have revealed that bitcoins can be used to provide low-cost money transfers, particularly for those seeking to transfer small amounts of money internationally, such as remittance payments. Beyond no doubt, the main efficiency of cryptocurrency is the elimination of intermediaries and the reduction of transaction cost.
There is current growing institutional interest in cryptocurrency, proving the growing value of crypto. Major financial institutions like Morgan Stanley have started giving clients the platform to access their funds in cryptocurrency. Tesla, the largest EV company in the world invested $1.5 billion into bitcoin and has also made it possible for customers to purchase a Tesla using cryptocurrency. These major companies are investing into cryptocurrency with the expectations of returns on their investments and also looking into a future of cryptocurrency as an alternative. Other major institutions will begin to follow suit soon enough.
Cryptocurrencies could be the future: they have good security, provide privacy and also integrity due to their cryptographic software and distributed ledger technology with irretrievable and immutable transactions records. Therefore, in the face of global uncertainty, conducting business transactions through cryptocurrency could be an effective way for people and businesses to diversify their assets. People should trade in cryptocurrency as it is safe and uses public-key cryptography for security. In fact, amidst the global coronavirus pandemic, and geopolitical power shifts, banks, people, and governments should view crypto a much feasible alternatives to fiat currency.
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