Technical innovations have been foreshown as the “future of business”. From simple printing machines to iPhones, industries are pinning their hope on technology. The aim is to operate everything with significant coherence and security.
No one knows which technology is going to have the next big impact in the industrial and technological fields. Yet, there is no denial that blockchain is generating a far-reaching level of whir.
Blockchain is a secure, unchangeable, and decentralised simulated pursuit of transactions. It can be even tracked to its source. Blockchain comes with so many other benefits. Such as:
- Keyless signature system
- The potential to trace produce from source to consumer.
The most attention-seeking manifestation of blockchain technology is cryptocurrencies.
The purpose of having a digital currency is that anyone can generate it. It is free of any source and uncontrolled by the central authority. It has been on every side since the 1980s, though it has failed for so many reasons. This failure includes:
- Regular crackdowns
- An unattainable virtual mode of transaction
- Reluctant third parties.
So what is different in the present era of cryptocurrency? How is it reshaping the financial world at large?
Many technological disturbances prospered only at the right time. Let us take the example of Uber. It was a Silicon Valley company that’s been purely identified by the services it offers. Very few people take a taxi these days, everyone book an Uber.
But without any doubt, cars and drivers were always around even before Uber. So what was the £53 billion code used by Uber which made the service simple and omnipresent? It was nothing but the arrival of the smartphone revolution and high-speed internet. Which made it possible for Uber to cover this much distance.
How Crypto is reshaping finance and the world at large
The virtual world has taken a different swing which made uber a successful venture. It is the carbon copy for cryptocurrencies in today’s time. Prior digital currencies had the paucity of the main ingredient of blockchain which would have taken them to a next level.
Cryptocurrencies are sheerly powered by blockchain. It is highly decentralised and encrypted digital money. Decentralisation is an important aspect of crypto. It gives them the upper hand over other traditional currencies. Because it eliminates the middleman.
The absence of central authority such as the Financial Conduct Authority (FCA), has led to uncertain fluctuations. From time to time they are well sustained by free-market economics. Yet cryptocurrencies like Bitcoin and Ethereum have taken over the financial world by storm.
Digital currencies are worth more than any other fintech company. If compared by a total of 100 fintech companies, the total valuation of the top 100 cryptocurrencies tops the chart with $2.44 trillion.
It gives rise to a few questions: What is the true strength of cryptocurrency? What can it accomplish in the future if it’s already outpacing the fintech companies at an early age?
What is the safer way to track the crime crypto or cash?
While only 0.34% of cryptocurrency transactions were classified as a criminal act in 2020, cash was at 34-39%. Cryptocurrency leaves a trace, making them highly vulnerable to getting tracked. Crypto has an outstanding capability for law enforcement departments due to its traceability.
But, cash is untraceable and it offers facelessness and favours illegal activities. For instance, drug trafficking, smuggling, or money laundering.
Governments are on the run for creating their cryptocurrencies in the form of central bank digital currencies.
A type of new economy where assets value more than banks
The most famous Shiba-Inu coin was, in reality, created as a meme-coin. It held a market cap of around $1.76bn USD at its time of publication and it also valued more than Starling Bank. Without any doubt, we can think that more cryptocurrencies with genuine use might do in the future.
Regularising access to free markets and capitalism
Cryptocurrencies aid firms and also assist underserved regions. Because they provide access to a worldwide financial system even for the people without a bank account. It is very well known that cryptocurrencies act as a channel that helps in reducing poverty. It takes people out of their situation by providing them with a free market and capitalism.
Risks linked with cryptocurrencies
With the rise of technology, there are so many other things that could go wrong. Cryptocurrencies are subject to malware hacks, cyber theft, and attacks. Through malicious websites or apps that can steal the private key. There have been so many compromised cases of cryptocurrency in the past.
The price of cryptocurrency can be easily manipulated by criminals. This type of theft happens when cryptocurrency lacks liquidity. Because of its low market cap if compared to traditional markets such as stocks.
Transactions on the blockchain are visible and traceable by anyone. Whosoever knows how to read the transaction data, can hide their money trail through cryptocurrencies like Monero (XMR).
These dangers are real but there is an inverse risk of the cryptocurrencies which should be taken into consideration. Applications that are built on blockchain tech have a financial institution as their target market.
This means criminals and terrorists may not use cryptocurrency for sinister purposes. As they would prefer to use cash for anonymous transactions.
Future of cryptocurrencies
Digital currencies are not just for making payments more efficiently. They also are a great way to store value and do transactions within the global economy. These are unique types of fintech. They have enough potential to transform the vertical of every financial sector. Be it trading, investing, or any other means of payment.
The graininess and flexibility of this kind of tokenization imitation will aid in a level of freedom that has never been seen before in the world. Everyone will have control over their assets and they will be able to place a trade easily and instantly.
You can not ignore or underestimate the high potential impact of this micro-payment. You can easily monetise every conceivable business model. Only if you profitably move $0.01 around any use-case or asset type instantly and globally.
Crypto offers more liquidity, secure and fast medium of exchange than any other traditional asset type. If the technology keeps on evolving at the same speed, then the future of digital assets will be tremendous.
Yet to see how crypto will reshape the finance industry even more.