Is Cryptocurrency The Future?

Welcome to the topic “IS CRYPTOCURRENCY THE FUTURE?”

There is no doubt that cryptocurrency has actually grabbed investors’ attention around the world for some time now, while many businesses and consumers also seem interested in it. For sure, cryptocurrencies offer diverse advantages. They offer efficiency, security, privacy, and, most important of all, broad access at the same time.

The unique advantage of cryptocurrency is its autonomous and decentralized nature, and this is the main reason we can see rapid growth in crypto transactions. Over the last five years, individual accounts and cryptocurrency transactions have grown by around 60% per year.

Cryptocurrencies have become popular because they make the transfer of funds between two parties easier. Therefore, one doesn’t need to involve a third party like a bank or any other financial institution. Cryptocurrency is more secure and creates a second impact on the world’s financial system and is ultimately helping to transform the financial system in the future.

What is Cryptocurrency?

It is known to be a virtual or digital currency designed to work as an exchange medium. Cryptography is usually used to verify and secure transactions and also control the new units of a particular cryptocurrency. Essentially, these are the limited entries in a database that cannot be changed unless one can fulfill their specific conditions.

Every transaction in a cryptocurrency is a file with the wallet addresses of the senders and the recipients and the number of coins transferred. It is also essential for the sender to sign off the transaction with a private key, and so all of the transaction is broadcasted in the network after confirmation.

Only miners can confirm the transactions within the network of cryptocurrency. They take the transactions, and mark them as legitimate, and then spread them all over the network. After that, it is added to every node of the network that adds it to the database.

How is a Cryptocurrency Used?

• Buying goods

It wasn’t easy to find a merchant who would accept cryptocurrency in the past. However, the situation is quite different nowadays. Many merchants are available both online and offline that do accept cryptocurrency as a form of payment. These merchants range from online retailers to bars, local shops, and even restaurants.

Over time, things are changing for the better; for instance, Apple has authorized a minimum of ten separate cryptocurrencies as a viable payment form on their App store. There are many Gift card websites that also accept some cryptocurrencies.

• Invest

Many investors consider cryptocurrencies to be the hottest opportunity for investment that is presently available. With crypto investments, many people have become millionaires. Still, there is no doubt that cryptocurrencies can be high-risk investments because their market value tends to fluctuate like no other investment type.

Cryptocurrency is also party unregulated; therefore, we can always see it getting outlawed in certain jurisdictions, while there are also chances of cryptocurrency exchanges potentially getting hacked. Once cryptocurrency is bought, you will need to store it; though all exchanges offer wallet services, an offline wallet on a hard drive can be the best place to store it.

• Mine

Miners are known to be the most crucial part of a cryptocurrency network, as mining is also considered an investment like training. Miners are offering a bookkeeping service for the respective communities. They are helpful to contribute computing power to solve complicated problems of cryptography.

A fascinating fact about mining is that the puzzles’ difficulty is continuously increasing, correlating with people’s number to solve it. With the increase in cryptocurrency attraction, there is a decrease in the number of coins received as reward and mining become harder.

• Accept as payment

For business owners, especially those looking for potential new customers, the right solution for them is to accept cryptocurrencies as a payment type. There has never been a higher interest in cryptocurrencies, and undoubtedly it will only increase in the coming future.

A business needs to inform the customers that it accepts cryptocurrency by merely putting a cash register sign. Several services can be used to accept payments in cryptocurrencies. In the US, many cryptocurrencies have been recognized as convertible virtual currency. Therefore, accepting this payment is like accepting cash or gold for them.

Advantages of Cryptocurrency

• Transactions

In traditional business dealings, the agents, brokers, and legal representatives sometimes add complication and expense to a straightforward transaction. There usually are brokerage fees, paperwork, special conditions, and commissions.

The advantage of cryptocurrency transactions is that, first of all, they are one-to-one transactions. This is very helpful to bring clarity in establishing audit trails. Therefore, there is greater accountability and less confusion about payment among the two parties involved in the transaction.

• Asset transfers

Some financial analysts describe cryptocurrency as a blockchain that can execute and enforce a contract between two parties on different commodities. Blockchain cryptocurrency might also be used to facilitate unique transfer modes. As far as asset transfer is concerned, cryptocurrency makes you have exclusive governance over your account, thus minimizing the time and expense involved in making asset transfer.

• Easy, confidential transactions

Usually, an account holder’s entire transaction history can become a reference document for the credit agency or bank on each transaction. Cryptocurrency offers a significant advantage: with each transaction, you make a unique exchange among the parties, while the terms of each transaction can be negotiated and agreed upon. Also, the exchange of information can be done on a push basis, which means that you can transmit the information that you wish to send to the recipient and nothing more than that.

• Little transaction fees

There is always a level fee imposed on transferring funds, whether by check or credit card. These transaction fees may take a big bite out of your assets, especially if you perform a lot of transactions. In the case of cryptocurrency, the transaction fees don’t apply as the data miners do the number crunching, through which cryptocurrencies receive their compensation.

• Greater access to credit

Internet and digital data transfer facilitate the exchange in cryptocurrencies. These services are available to the ones having knowledge and possible data connection, and ready access to the portals and websites. The cryptocurrency ecosystem has the potential to make transaction processing and asset transfer available to the consumers who are willing after putting in place the required infrastructure.

• Easier international trade

Cryptocurrencies are not subject to any interest rates, exchange rates, or any other levels that are imposed by a specific country. With the help of the P2P mechanism of blockchain technology, transactions and cross-border transfer are conducted without any complications over the fluctuations seen in currency exchange.

• Adaptability

Around more than 1200 unique cryptocurrencies are circulating all over the world. Most of these may be ephemeral, but many have been created for specific purposes in order to illustrate the phenomenon of cryptocurrency.

• Strong security

Once there is an authorization of cryptocurrency transfer, one cannot reverse it, as in the case of the credit card companies in which chargeback transactions are typically allowed. This is basically a hedge against fraud, which needs an agreement between the seller and the buyer about the events if there is a mistake.

The Future of Cryptocurrency

Cryptocurrencies have come a long way since Bitcoin was invented in 2008. With the help of blockchain and innovative technology, cryptocurrency as a digital asset has encapsulated a number of areas. Now people don’t consider digital currency to be speculation; they are known to be investment vehicles, a payment mode, and much more.

• Investment vehicles

No doubt that in the past some years, prominent organizations are offering different services that pertain to the cryptocurrency industry. Because of this, many hedge fund managers, institutional investors, and investment managers are starting to show interest in cryptocurrencies.

We can see many investors getting keen to include digital assets in their investment portfolios. It can clearly be seen that with the onset of institutional investors, there are chances that cryptocurrencies are likely to be treated as the tools of investment alongside gold and stock in the coming future.

• Easing regulations

Over the past years, we are able to see various governments changing their stance towards digital assets and cryptocurrencies. For instance, the Financial Authority of Germany has classified cryptocurrencies as its official custodians.

We can see the governments drawing regulations to offer an environment that is legally compliant to trade and invest in cryptocurrencies. Therefore, it is easy to predict that in the future, we are likely to see different countries drawing regulations that pertain to the usage, storage, and trading of digital currencies.

• Causing disruptions in banking and finance

While cryptocurrencies have started to develop in many industries, one can see that the financial ecosystem may be the first one that may undergo significant disruption. From tokenizing financial instruments to the transfers in cross borders, there is no doubt that cryptocurrencies have applications in various verticals in the finance and the banking industry.

More than twenty countries have started the concept of Central Bank Digital Currencies (CBDC), and this number is likely to grow soon. Among the primary reasons is the cost of financial transactions by using cryptocurrencies is very much lower as compared to the cost of transactions in the traditional economy.

• Cryptocurrency exchange hub

As we can see a rapid interest in trading and investments in cryptocurrency, it would be creating an imminent requirement for the infrastructure to be supportive. Digital cryptocurrency trading is not sustainable with the current methods, and therefore we may see discrepancies in the processes and methods in the long-term.

We are likely to see the emergence of exchange hubs in the near future that will offer multiple solutions under a single platform. A few exchange hubs already offer a one-stop solution to traders, so that they can access the best prices in the cryptocurrency market with minimal hassles.

• Innovation with crypto tokens

We are likely to see cryptocurrency tokens in the upcoming years that can easily be integrated with other innovations and technologies. This can include smart contracts, AI, and also the internet of things, also known as IoT.

In order to offer supportive infrastructure, tokens will be used to infuse automation and build smart tools by integrating innovative technologies. For instance, unlocking the smart locks is only possible when the owner deposits the cryptocurrency tokens into a specified wallet. This system can further be automated by a smart contract with the encoding rules.

• Mainstream adoption of cryptocurrency

Apart from being a tool for investment, cryptocurrency is likely to take a prominent role in our day-to-day life. The digital currency concept is growing at a rapid pace. These cryptocurrencies also offer a lot of perks when they are used as a mode of payment transfer. This fact has been acknowledged by different businesses, retailers, and merchants.

In the US alone, around 36% of businesses (whether small or medium) are accepting cryptocurrency as a payment method. In the upcoming years, this number is likely to grow, as these digital currencies are starting to become mainstream.

• Decentralized applications

Decentralized applications or dApps are being developed to leverage blockchain infrastructure. These dApps are being developed for a number of industries, including supply chain, healthcare, logistics, gaming, food, and agriculture. DApps are like the normal apps and function the same way, but the main difference is that they run on P2P network like blockchain.

In the coming future, cryptocurrency tokens will be fueling the decentralized application network. The rapid development of dApps for various industries will fuel the development of even more digital currencies in the coming few years.

Bottom Line

Despite all of the innovation and growth that we’re discussed above, there is still quite a bit of debate regarding the future of cryptocurrency. Some people argue that the usage of cryptocurrency is limited to transactions. But that argument doesn’t really seem to hold up when you look at all of the ways in which cryptocurrency, based on a growing blockchain infrastructure, can be used. They can also be used as a payment system, as utility tokens, and as value storage.

In fact, it seems likely that cryptocurrency based on blockchain technology infrastructure will become the basis for a new decentralized financial system. A financial system that enables affordable cross-border payments, improved privacy and security, censorship resistance, and access by anyone with an internet connection and a smartphone. Imagine a Nigerian migrant in Europe, with no bank account, inexpensively sending money directly to his family back home. And countless other applications.

Will governments and central banks cooperate with this by creating new hybrid models that allow their existing centralized systems to coexist with the new, decentralized system? Time will tell, and we’re still in the early days, but as decentralized finance becomes viable, there will be immense pressure to cooperate.

Have any questions regarding the topic IS CRYPTOCURRENCY THE FUTURE? Feel Free to comment down below.

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