Era cryptocurrencies are designed to revolutionize the financial system, making central banks redundant. However, their technical potential is limited, and the financial benefits could be better. What remains but technological euphoria and how to make a cryptocurrency? These are questions that remain open and of concern to many. After all, cryptocurrency has conquered the world over the past decades. It has become more than a means of payment. Cryptocurrency coins are evolving and reaching a new level.
Stages of cryptocurrency evolution
Bitcoin has been the most valuable and essential cryptocurrency for ten years. It began as a romantic vision of a world without banks, which could be obtained for pennies. Today, the rate ranges from 30,000 to over 50,000 euros. An entire crypto-financing industry has emerged. Trade crypto currency has become popular all over the world. A distributed registry records every transaction from the first coin to the present day.
An algorithm has been programmed to ensure that there is only one valid board log, accepted by all on the crypto currency blockchain: among all members of the network, the accountant who keeps the board log is constantly changing; for example, every 15 minutes continues to write for the community. Blockchain technology is considered secure from unauthorized access.
To determine whose turn it is to keep the accounts, the last link in the chain, for now, ends up in a cryptographic puzzle whose code can only be cracked with the help of enormous computing power. Whoever solves the cryptographic puzzle first will record the next block, hence the name “blockchain. Because of the decentralized finance process, blockchain is considered tamper-proof.
- Blockchain can create trust between individual market participants, which with conventional currencies can only be created by a central authority, the central bank. This means that cryptocurrencies are entirely independent of government monetary policy.
- Since the blockchain protocols of Bitcoin and many other cryptocurrencies are also programmed so that only a limited amount of money can be mined, digital currency is also considered particularly inflation-proof. Therefore, it is not surprising that Bitcoin was the first cryptocurrency developed ten years ago due to the global financial crisis.
Investing in cryptocurrencies is open to everyone. Theoretically, you don’t need a deposit, not even a bank account. A computer or smartphone is enough to log into the blockchain with an individual user ID and an alias and buy cryptocurrency.
The future of cryptocurrency in our lives
However, most banks and savings banks still need to be ready for the topic. This makes it all the more important to find out how they should deal with it early. Smaller institutions, in particular, face the challenge of acquiring the necessary know-how to deal with the regulatory risks or the enormous potential volatility of cryptocurrencies. Partnerships with large banks or FinTechs offer opportunities to gain a foothold in this area.
Cryptocurrencies and other technological innovations are preparing the ground for a more open and inclusive global financial system. Cryptocurrencies are growing in popularity around the world. While they may not yet have reached mainstream adoption, many in the industry are working to ensure that this technology becomes accessible to all.
- Advantages of cryptocurrency and disadvantages of digital central bank money. Central bank digital currencies (CBDCs for short) are, in simple terms, digital versions of the same fiat currencies that people use in their daily lives. They are becoming an increasingly popular topic, and many governments and central banks are currently looking into developing their CBDCs.
- The European Central Bank fights back against CBDC myths. The European Central Bank has hit back at public “misconceptions” about the digital euro and its future cryptocurrency role as a replacement for physical cash. In particular, the ECB denies that it intends to abolish cash and impose even lower interest rates on the digital euro for monetary policy reasons.
- Investor demands are on the rise. A new generation of technologically advanced digital platforms and mobile tools is creating a new generation of investors who expect the same availability of toolkits whether they are buying cryptocurrencies, digital assets, stocks, bonds or foreign currencies.
Bitcoin, ether, Cardano, Dogecoin, and many other cryptocurrencies have long existed, as well as stablecoins linked to tangible assets such as foreign currency or stocks. More and more options and derivatives, that is, complex crypto-financial products, are also being traded. Recently, U.S. authorities banned the exchange platform Coinbase from launching consumer loans in high-risk cryptocurrency.
Experts agree that cryptocurrencies such as bitcoin and ether will never become a standard means of payment in our daily lives, at least not in countries with stable and reliable currencies. Instead, they serve the function of bonds and gold – speculative investments that pay off in the long run – as long as enough people believe in them.
Bitcoin proliferation as a means of payment
Bitcoin is already accepted as a means of payment at many online stores, various online platforms, and online service providers. Customers can also use other payment methods, such as bank transfer, credit card, or PayPal, but the number of Bitcoin acceptance points is increasing. Bitcoin payments are considered safe, but exchange rate fluctuations must be taken into account. Because Bitcoin is based on a blockchain, all activity can be tracked. Bitcoin payments are anonymous, but the blockchain is still a safeguard against manipulation. More and more online casinos are accepting bitcoins as a means of payment.
The decisive advantage is fast payment. The money is available immediately after a deposit. This also applies to online stores where payment can be made with bitcoins. Bitcoin as a means of payment is a standard business asset for companies. That is why it is especially interesting for startups. Banks and fintech companies also show a growing interest in bitcoins and other digital currencies.
Because Bitcoin remains the cryptocurrency with the highest market capitalization, it has great potential to impact the global economy in the future. Instead of traditional assets, Bitcoin can be used as a digital asset in significant international investments. However, there are price fluctuations with bitcoins, just as there are with traditional foreign currencies.
The U.S. dollar has long served as the reserve currency in global transactions. Bitcoin allows such transactions to be separated from the U.S. dollar. Because of bitcoins, intermediaries such as banks have become less critical in international payment transactions. Bitcoin makes you more independent of traditional currencies.
As an alternative to the current monetary system, Bitcoin could revolutionize the global financial economy. It serves as insurance during financial crises and can then increasingly be used as a means of payment. One advantage is that Bitcoin does not exist in physical form. Payments are made only virtually. This protects against loss and theft, which is always possible with traditional currencies in the form of cash. There is also no need to exchange money, as with cash payments with traditional currencies in international payment transactions. Thus, payments can be processed quickly.
Therefore, more and more companies use Bitcoin in national and international payment transactions. Bitcoin as a means of payment can open up new markets, for example, in developing countries.
via: Information Nigeria