Ever since the release of the world’s first cryptocurrency, Bitcoin, in 2009 by an anonymous group of people, it has taken the world by a storm. Today, more than 2000 varieties and variations of the digital currency are available on the internet for people to buy and invest in.
Given its anonymous, encrypted, and decentralized nature, cryptocurrency has become one of the most common forms of investments for many. The recent years saw a rapid increase in its popularity and a surge in the number of users preferring cryptocurrency over real money. If you want to know more about the same, you can visit CoinGuides for more information.
Some local people and global leaders have always expressed a few doubts and concerns regarding the digital currency, mostly due to its unstable nature and hard tracking. But for some, it is rewarding and has the potential to boost the national economy. However, you can check the information provided below to understand how cryptocurrencies are impacting national currencies.
1. Decentralization of revenue:
Well, this one is a topic of discussion. For some, it is a good thing that cryptocurrencies are still decentralized, meaning no government or higher authority can stop the usage of the same. This has given individuals and firms similar chances to trade with countries where economic stability is much higher. This has also posed some challenges for the national government of various countries, as it is quite hard to trace the transaction and the purpose of it. This impacts the national currency as this reduces its value and makes it seem inferior.
If for some reason, the government is able to control crypto, or centralize the same, then it might be a possibility that it would help to lift up the status of normal currencies. But this would make crypto lose its essence, thus losing the market.
2. Use of blockchain:
Every single cryptocurrency uses the blockchain technology to make the transactions done using the same untraceable. Blockchain is a database, where every transaction is broken into millions of fragments, called blocks, and are arranged in a random fashion. This stores the details of the transaction, however, makes it nearly impossible for anyone to trace it, as it would require putting the ‘blocks’ in the correct sequence.
This peer-to-peer transaction style has made the banks worrisome, as it poses threats to the national security of the nation. Without proper authentications of the customer and people involved, this could be used for any illegal activity, and hence has become a reason for rift between the people using digital currency and the regular currency issuers.
3. Exchange value:
This, again, is a hot topic and is up for debate. People use a variety of third-party mediaries to send out money or to receive cash. One common example of this is the credit card everyone uses on a regular basis. These card companies are basically sending out money to us for use. However, with crypto, you can eliminate these third-party intermediaries and be free to spend your amount however and wherever you like, without the fear of it being controlled by some other giant company.
This has stirred great concerns in the local currencies, as they are highly dependent on these mediaries to survive. This has a negative impact on the regular currencies, but has a potential to overcome them and become the national currency of all nations in the not so distant future.
Money which is generally used all over the world in the form of paper bills and coins come with a token of promise that no matter when you use it, where you use it, it will remain of the same value. There is a certainty that even after a month, the ‘money’ or the total amount would remain the same.
However, given the constantly changing inflation market of cryptocurrencies, it seems highly unlikely the amount would remain the same by the end of the very same day. This has stirred a lot of concern in the minds of the investors and buyers. This way, fiat currency, or the national currency of any country has a better edge over the digital one.
Will crypto replace cash?
Well, this is an interesting question, as some of the most influential people of the world are already discussing the same. Tech giant and the richest man on the planet, Elon Musk, in an interview once said that ‘paper money is going to disappear and crypto is far better than anything else we have available right now’. This statement has a lot of potential and dreams to be true, but not in the near future.
There are many hurdles to achieve this, first being that not every single person on the planet owns a smartphone or is connected to the internet, where they could simply purchase a few digital currencies. Second being the volatile nature of the same. It is so volatile and unpredictable that people will start losing their minds every time the market would take a dip. And not many people are actually patient enough to wait for the market to rise back up.
Thirdly, it is still not accepted as an actual form of payment and transactions in many countries, and is banned in a few. This would make things much harder.
Therefore, no matter how much potential it has, or how much convenience it would get for everyone, there is no way in the near future that crypto would be actually dethroning regular currency from its place.
Cryptocurrency was born over a decade ago, and has slowly and gradually covered the entire globe. With its recent boom in users, the industry saw a rapid surge in the various companies of digital currencies. These are already legalized in many parts of the world, and are used as a legit mode of transactions for many services. However, it still has a very long way to go before world domination, before it is used as the only currency all across the globe.