Why is it that Cryptocurrency is seen in negative light and has been banned in many developed countries?
Some of the major reasons behind the same are the security issues, financial stability and the decentralized nature of cryptocurrencies. However, one cannot deny the fact that cryptocurrency being a matter of concern for the government, has turned out to be beneficial for others.
There are always some risks and benefits associated with new developments, and similarly, cryptocurrency too possesses some risks and rewards for everybody including the common man, investors, traders, developers, businesses and the economy.
The Risks and Returns
Cryptocurrencies pose a risk of volatility which can be a boon if used to the best of a person’s advantage. Traders who have hands-on experience in the field have benefited tremendously from the crypto volatility. On the other hand, some have been a victim of the downfall of cryptocurrency as well. While illiquidity is a disadvantage for investors and traders, it is an advantage to the ecosystem. This is because cryptocurrencies in circulation are fixed and bring stability to the markets.
Cryptocurrency cannot be duplicated, and hence the coin circulation can only be regulated by the creators of the underlying technology. Due to lack of regulatory or governing authority, control is completely in the hands of the users. Moreover, with pseudonymous nature users can hide their true identity while transacting in cryptocurrency, yet can be traced with their wallet address. Peer to peer transactions also eliminate the need for middlemen thus bringing the cost to a minimal or negligible level.
Apart from value appreciation and speculative volatility gain, users can also earn passive income in the form of staking, dividends and revenue sharing. Not only the investors and traders but the developers/ miners have also benefited from cryptocurrency. Blockchain requires solving a complex mathematical problem to verify and connect every block of transaction to the chain. Here’s where mining provides gain to miners in the form of rewards.
The Economic Impact
Today, USD dominates the market and is becoming stronger day by day. USD being the reserve currency for the world economy affects all the countries if there is any change in the US financial market. With the decentralization of cryptocurrency, no particular country will hold the power to affect the world economy. Blockchain enables decentralized control and inhibits single entity ownership or authority, and as such counties will have an equal opportunity to influence the markets and build a stronger economy financially.
As more and more businesses are adopting cryptocurrency, the practice will bring about tremendous change and improvement in the economic system. As mentioned earlier cryptocurrency cannot be duplicated, each transaction is traceable and as such corruption or manipulation at every level could be eliminated. Not only will the businesses benefit but the economy too will witness the change being reflected in the economic statistics.
Here are some statistics that prove the growing popularity of cryptocurrency and its adaptability among the public: Approximately 4.3 Million blockchain wallet users were reported in September 2015. In a span of just two years, the number of users surged to 17.2 Million in September 2017. There was a hike of 400% in the usage of blockchain wallets. The economy witnessed a further surge of 163% with approximately 28 Million users being reported in September 2018.
Conclusion: It’s quite eminent that cryptocurrency possesses far more potential that is yet to be realized by the economy. Be it finance or technology, Blockchain and Cryptocurrency are dominating the markets, and this will continue to grow through the coming decades. What we can expect is a change in the approach towards the adoption of the technology.