In recent years, virtual currencies have enjoyed their fair share of sensationalism in the modern global economy. All the hype is well-founded, considering the exciting prospects of cryptocurrency in the rapidly expanding digital economy if only the prevalent limiting factors can find lasting solutions.
Essentially, virtual money is generated and transferred via computerized transactions on the internet. Cryptocurrency is not subject to government control or regulated by any particular financial body. Digital currency is created through a process known as mining. Powerful computers process complex equations to come up with the actual currency. Ordinary computers cannot execute this process. The method by which this type of currency is protected is known as crypto encryption, which is a more advanced encryption method.
The use of cryptocurrencies has been growing for some years now and today there are close to 300,000 Bitcoin transactions recorded daily around the world. When Bitcoin became popular it initially started on the “black market” and the illicit activity in 2019 was estimated to account for 1 percent. There are more than 2,000 different types of cryptocurrencies on the market, including Bitcoin Gold and Facebook's Libra, but Bitcoin still accounts for the majority of the transactions. The i-Gaming industry was the first large scale industry to fully incorporate Bitcoin as a currency and today most operators also support Litecoin, Etherum and Dogecoin. Outside of the gaming industry, merchants around the world have started to accept Bitcoin as a payment method and in Australia, both e-Commerce sites and Point of Sales systems in store accept Bitcoin. In June Coca-Cola Bitcoin vending machines became available across both Australia and New Zealand and as of June 2020 Australians can also pay for Bitcoin at the Australian Post branches across the country.
Given the popularity of using digital currencies combined with the lack of trading regulations in some parts of the world, it raises a plausible question of whether this digital technology will survive in the future and to what extent it will dominate the modernized global economy. Is cryptocurrency a bubble or will it be the future of financial transactions?
Privacy and Commonness
Unlike older currencies, Cryptocurrency offers the highest privacy level, allowing people to transact without prominent institutions and regulators' interference. Even though this channel uses a network to transfer currency, no data can be traced back to the sender or provide any digital footprint. Certain dealers, therefore, feel that this method offers unmitigated financial freedom, hence more preferable.
Cryptocurrency is also more affordable since it is not subjected to transaction fees even when transferring such funds to the far reaches of the world. Evidently, digital currency threatens the prominence of traditional currencies, given that it is widely accessible to the entire world.
Changing Laws and Attitudes Towards Digital Currencies
In recent years, many countries have revised restrictions against cryptocurrencies. Various governments and their advisory bodies have come to the realization that their economy could soon lag if they don’t adapt to the current financial trends. Holding out could result in missing out in the most profitable stages if the currency ends up dominating the global markets. Besides, the vast number of cryptocurrency users provides a strategic market that any government would wish to leverage.
Many countries now declare Cryptocurrency as a legal means of transaction, thus validating it to its citizenry. Undeniably, more states will follow this trend in the near future as the method gains traction in digital markets.
Crypto Tokens and Smart Devices
Many will agree that we are edging closer to a technological golden age if we aren’t quite there already. As a significant player, Cryptocurrency will have a greater advantage over traditional currencies in facilitating future commerce. Automated devices are already an integral part of day-to-day lifestyles. Crypto tokens facilitate the seamless operation of smart devices that communicate with one another and independently carry out tasks.
Factors Demoting Crypto’s Future
Crime and Government Injunction
The anonymous nature of cryptocurrencies could be a significant contributor to its downfall. Owing to its untraceability, Cryptocurrency has become a safe haven for illicit transactions such as drug trafficking, money laundering, and financing terrorism. Virtual currencies are also not subject to taxation, a factor that makes many governments apprehensive. This has motivated many governments to sabotage the progression of such currencies first to establish a mechanism to gain more control over transactions.
Many modern businesses running the currencies are currently under the close watch of governments and other regulatory bodies because of the numerous speculations concerning their systems' questionable security and money laundering control.
Security Concerns
As already discussed, cryptocurrencies are not entirely safe, given their lack of traceability. There are lots of risks involved in using bitcoins as a store of wealth. First, bitcoin markets fluctuate erratically with substantial price differences. Therefore, smart investors can only inject capital amounts that they can afford to lose, and nothing more. Cryptocurrencies also have less liquidity compared to other currencies. Additionally, there are many security flaws in the system, given that it uses network and electronic mediums that are susceptible to hacking. Apart from marauding hackers, people can also lose wealth through technical errors owing to the currencies' virtual nature.
In entirety, there are milestones that are yet to be achieved to secure the future of digital currencies. However, there is no denying that cryptocurrency will have a substantial market share in the future, making it necessary to track how the medium adapts to emerging industrial trends.
