The case for substituting fiat currencies with cryptocurrency has long been debated and discussed. Some experts have associated the use of cryptocurrency with speculative investments and the pursuit for quick profits, but there’s more to the picture than that. Some building principles of cryptocurrencies can cause massive positive disruptions in the business arena. These forms of payment are now emerging as financial tools that can offer more accessible capital and spur economic growth, particularly in developing countries. Here are some of the ways in which cryptocurrencies can change the world’s future.
Access to Banking
According to the World Bank, just about a third of the world population doesn’t have access to basic banking services. That means no access for checking accounts, credit in times of personal crisis, and long-term loans to pursue business and improve their lives—the list goes on. These people often end up relying on risky and unfavourable lending practices. Almost as many people have access to mobile phones, and the adoption of cryptocurrencies can offer better financial inclusion by providing better transparency and competition.
One of the promising features of cryptocurrency is the ability to break down transactions into minute amounts. Blockchain technology can break down transactions and share them among many people. Traditional banks collect money from various individuals and re-lend it to make a profit. In future, cryptocurrencies may make it possible for borrowers to get money from multiple people simultaneously. Blockchain technology can also allocate impartial risk profiles and spread lending across individuals, such that no one takes a substantial loss.
Some countries have borne the brunt of hyperinflation and for years due to fiscal mismanagement of their banking systems and other issues with their central governments. With the adoption of cryptocurrency, banks will not be required to house and print money, or to facilitate transactions. The use of cryptocurrencies might not be enough to fully stabilise these economies. However, it might be enough to facilitate improved trade with a currency that they can trust and know will maintain value. Improved trade might open new doors that will eventually lead to stable economies for such countries.
Not only do traditional banks have to move money between people and locations, but they also have to pay several third-parties in the process. As we mentioned earlier, cryptocurrencies remove the role of intermediaries from the banking supply chain. These multiple layers of intermediaries will, therefore, be severely affected by a cryptocurrency revolution.
Because cryptocurrencies don’t need to rent a building, hire employee wages, or pay for utility bills and other overheads, they have significantly lower transaction fees. Lower transaction costs will naturally attract more people to adopt cryptocurrency payments. More effective payment processes have the potential to boost e-commerce. E-commerce vendors have a significant chunk of their revenue taken as charges when a sale happens. Payment facilitators also tend to capitalise on exchange rates for different fiat currencies, such that e-commerce across borders is hampered. As cryptocurrencies are not country-specific, they will allow seamless global integration.
One of the core benefits that make cryptocurrencies popular is its ability to facilitate anonymous transactions. This is feasible as a result of an efficient 2048-bit RSA encryption system, (already successfully applied by online casinos listed on websites like https://www.gamble.xyz/ to ensure total transaction security.) Put simply, some people don’t want to attach their identities to private purchases for a variety of reasons. You might not want your name associated with gambling, adult toys, legal drugs, or any number of transactions. In physical settings, you can simply use cash, but things can become a bit more challenging online. The ability of cryptocurrencies to facilitate anonymous payments will allow for better availability of goods and services.
Just as they facilitate lower transaction costs, cryptocurrencies also have the potential to flatten the investing playing field by eliminating brokerage fees. Some brokerages make money from transactional fees, and holding structures end up being set up as the primary driving force of your investments. The role of brokerages in investing is to help share buyers and sellers to find each other, then facilitating ownership transfers and payments. Cryptocurrencies and blockchain technology can do all three of these roles, and expedite a world where investors can transfer the ownership of shares without mediation by brokerage firms.
We’re undeniably headed towards exciting financial times. This article has highlighted just a few possible applications of cryptocurrencies. The full adoption of cryptocurrencies and blockchain technology will have as much impact as the advent of the internet. While we can’t anticipate all these impacts, just giving leeway for such a future will enable us to plan better for it.
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