During the last few years, cryptocurrencies have developed from digital wonders to trillion-dollar technologies with the possibility to disrupt the international financial system. Bitcoin like hundreds of other cryptocurrencies is increasingly kept as assets and employed as currencies to buy goods and services, such as digital real estate, software, and illegal drugs.
To their supporters, cryptocurrencies are considered a power democratizing the system, wresting the authority of money creation and control from Wall Street and central banks.
As such, a currency cannot operate without stability, while Bitcoin’s combustible market value turns it into an even worse medium of exchange. Given its unpredictable market, most people are less likely to employ Bitcoin as a form of payment, waiting for its value to rise by a precise amount soon.
In parallel, vendors also reject to take Bitcoin as payment out of consideration that its value might fall at any moment. Since currencies like the U.S. dollar operate as legal tender reinforced by treasuries and central banks, they excel at delivering a stable index of value for any goods available on the market.
Absence of Regulation
Meanwhile, analysts note that the absence of regulation for cryptocurrencies delivers power to terrorist organizations, criminal groups, and rogue states, while the assets themselves suffer from market volatility, stoke imbalance, and engulf big portions of electricity. Regulations differ greatly worldwide, with some governments adopting cryptocurrencies and others restricting or limiting their use. As of February 2023, 114 countries, including the United States, are planning to present their central bank digital currencies (CBDCs) to contest the rise of cryptocurrency.
In addition, the factor that would make crypto a good investment is it offers better security, it is a peer-to-peer ledger, known as the blockchain, and cannot be meddled with as it is distributed across millions of computers worldwide. Bitcoin and the blockchain offer higher efficiency and speed. Standard slow processors, such as purchasing homes, can be simplified.
Another angle is that there is no connection between cryptocurrencies and any national currency or economy, therefore their price echoes global need rather than national inflation. Many investors say that the number of coins is limited, thus the amount available can’t go out of control, which will lead to zero inflation. For example, some coins (like Ethereum) have an annual cap, while others (like Bitcoin) have an overall cap, however, this approach keeps inflation low.
Cryptocurrencies have many advantages over banks, including that crypto markets are always open. What is special about crypto is that when coins are being mined and transactions being recorded, which usually happens all the time, investors don’t have to wait for the NASDAQ, NYSE or other exchange to start trading for the day if they want to buy, sell, or trade crypto.
Cryptocurrency depicts the future of digital currencies that will be used by countries and nations, such as El Salvador adopting Bitcoin as its national currency or even businessmen adopting cryptocurrencies in their platform. It is a long-term payment method that will take the place of cash.
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