Any talk about economy now a days is not complete without mention of Cryptocurrencies like Bitcoin, Ether etc. It is another matter that the governments all over the world are almost hostile towards these so-called digital currencies. And they surely have valid reasons for that.
However, the acceleration in the world of technology has given us yet another reason to talk in terms of Digital Cash or Digital Currency. The digital currency, universally recognized as cryptocurrency has been the latest fad among the investors. The modern world is now trading in terms of crypto coins or digital tokens. They can be used for sale and purchase at the outlets which are open to them.
The first ever use of Bitcoin to make a purchase was on an order of pizza in 2010 for an exchange of 10,000 Bitcoins. Those Bitcoins at that time had a value of mere $40. Twelve years down the line and the value of those 10000 Bitcoins is now not even conceivable. The exponential rise and growth in cryptocurrency have caught up the attention of many on the global front.
Cryptocurrency in itself is a kind of complete package. Crypto world equips its currency with features that are ready to fix the loopholes of the current money. It is unique yet recognizable, rare yet available, anonymous yet trustworthy, uncomplicated yet non- replicable, cheap yet fast. For what more one can ask in the arena of transaction facilities in this fast pacing world.
Henceforth it becomes all the more important to know about the benefits of the currency of future. Cryptocurrency has captured the fascination of people all over the world. And there are reasons for that. Some of them are:
1) INSTANT AND ECONOMICAL
The transfer of money had never been so easy, pocket friendly and expeditious before cryptocurrency. The problem of payment lag has been eliminated as it takes just a few seconds to send money from one account to another irrespective of the amount and distance. The normal transactions across borders were very heavy on the pockets as the transaction fee or charges levied by intermediaries were enough to burn a hole in the pocket.
The government agencies called the shots on international transactions (The Foreign Exchange Management Act – FEMA) and loans (Non – Banking Financial Companies – NBFC) and imposed obsolete law.
However, if we talk about crypto, the loans not supported by collaterals are processed at such a lightning pace that they are commonly known as Flash Loans. Moreover, all this comes at a very negligible cost as intermediaries are not involved.
2) DECENTRALIZED
Cryptocurrency is not controlled by any central government agency like Banks and monetary institutions. The intermediaries do not have any control on the transactions between people. The value and quantity of Fiat currencies in circulation is by and large determined by the governments.
Whereas the cryptocurrencies are generated by minting and mining and the value is determined by the market. Being independent of the centralized agencies, the possibilities of failure at any one point are wiped out as happened in the case of American Financial Crisis of 2007.
Keeping this in view, the governments will feel the need to restructure the fiscal system of the countries in the near future.
3) SELF-MANAGEMENT FOR ACCURATE RECORDS
The digital currency transactions are managed totally by the miners/ minters with the help of computers. As a result of which they either get the crypto coins of that very currency or the transaction fee. This incentive motivates the miners to maintain the precise and authentic records of all the transactions.
4) LOWER PROBABILITY OF FRAUDULENT ACTIVITIES
All the records of transactions is stored on the blockchains and it is almost next to impossible to crack the history of the transactions on blockchain. Cryptography, the soul of digital currency is a web that is spread across a huge number of computers. As a result, the possibilities of forging and duplicating digital currency are zero which also saves the users from the risk of double spending.
5) DATA ANONYMITY
Though the transactions can be accessed by anyone in public but the credentials of the account holder cannot be tracked by everyone. Digital cash can carry the information about the worth of the currency in question without generating any data about the purpose for which it’s used and by whom.
6) HIGH LEVEL SECURITY
Modern cryptocurrency system is highly secure as it survives on blockchains. Anyone who is dealing in cryptocurrency gets a personal online wallet which can be used to buy and sell.
This coin wallet can be operated with a combination of public key and private key only and the codes of the private key are with the owner of the wallet only. The transfer of payments is backed with a guarantee similar to that of cash, Demand draft or a credit card payment.
7) SHIELDS AGAINST INFLATIONARY SPIRAL
This can be understood with the example of Bitcoins. Bitcoin was the first cryptocurrency. It was introduced by Satoshi Nakamoto. The number of Bitcoins that can come in circulation is limited.
Therefore, as the scarcity will increase, the price of the existing Bitcoins will also increase with time and hence is capable of giving a tough fight to the inflation. The price is based on global demand and hence is outside the periphery of any one nation.
8) TROUBLE FREE EXCHANGE WITH OTHER CURRENCIES
Cryptocurrency can be easily bought from a crypto exchange like Binance, Coinbase, Huobi, Kraken etc using the currencies of those countries where the trading of crypto has been legalized. One can easily convert a US dollar, European euro, the Indian rupee or Japanese yen into the different types of coins or vice-versa. This all is facilitated by the exchanges at a very nominal expense.
9) TRANSPARENCY
With the help of apt software, one can easily check the transaction data which includes where, when and how many crypto coins have changed hands. Unlike bank transactions, which can be accessed by the account holder only blockchain ledgers can be seen by anyone.
10) 24 X 7 TRANSACTION SUPPORT
The Crypto exchanges are open round the clock throughout the year in comparison to stock exchanges which are open for only few regular hours on particular days of the week only. This makes it very convenient for the users to complete the international transactions in a timely manner.
The use of electronic money in the form of debit and credit cards, various online modes like Google pay, Paypal, etc. has accelerated in the last decade. It is further an indication of the way digital currency is all set to rejig the financial infrastructure. However, the guardians of the Fiat currencies will definitely delay their use in the prevailing economy.
The above-mentioned points are only some of the most important advantages of cryptocurrency but along with all these there are many shortcomings as well which cannot be ignored. In the next part, we will list major faults in the Crypto currencies due to which governments are taking steps from outright ban or regulating them.
So, for those who are interested in crypto trade it is advisable to finalize their decision after looking at both sides of the COIN.
