A cryptocurrency is a digital currency or virtual currency. It is intended to be used as a medium for exchange. It works in a similar way to real currency but does not have a physical form and uses cryptography.
Since cryptocurrencies work independently and are decentralized, they can only be added to units that meet certain conditions. Bitcoin is an example of this. A miner will only be rewarded with bitcoins if a block has been added to the blockchain. This is the only way to generate new bitcoins. Bitcoins have a limit of 21 million. After that, there will be no more.
Cryptocurrency has many benefits
The transaction cost for cryptocurrency is very low, if at all, compared to, for instance, the fee to transfer money from a digital wallet into a bank account. Transactions can be made at any hour of the day or night. There are no restrictions on purchases or withdrawals. You can use cryptocurrency without any restrictions, unlike opening a bank account that requires documentation.
Wire transfers are slower than international cryptocurrency transactions. Transferring money from one location to the other takes wire transfers about half an hour. Transactions with cryptocurrencies take minutes, if not seconds.
Future of Cryptocurrency
When it comes to cryptocurrency, the world is divided. Bill Gates, Al Gore, and Richard Branson are all supporters of cryptocurrencies. They believe that cryptocurrencies are more secure than regular currencies. People such as Warren Buffett, Paul Krugman, and Robert Shiller are against it. Krugman, Shiller, both Nobel Prize-winners in economics, refers to it as a Ponzi scheme that is used for criminal activities.
There will be a conflict in the future between anonymity and regulation. Many cryptocurrencies have been linked to terrorist attacks. Governments would like to regulate their use. However, the main purpose of cryptocurrency is to protect users’ anonymity.
Futurists predict that cryptocurrencies will be 25 percent of all national currencies by 2030. This means that a large portion of the world will start to accept cryptocurrency as a method of transacting. It will be accepted more by customers and merchants. The volatile nature of cryptocurrency will mean that prices will continue fluctuating, just as they have done for the past few decades.
We see an increase in concern about data security protection, despite countries continuing to express their ambivalence regarding cryptocurrency technology and struggling to understand blockchain regulatory solutions. It is important to ask: Will international regulators collaborate? Blockchain technology and cryptocurrency transcend borders. Domestic regulators must address breaches of their laws through global coordination and harmonization of a uniform set of regulations concerning data security. It is difficult to figure out how to enforce and regulate laws in a virtual currency universe that operates anonymously across borders. These problems include the use of cryptocurrency to (1) finance terrorism and money laundering; (2) encourage tax evasion through hiding income; (3) defraud individuals or companies by manipulating markets. Regulating is necessary not to alter the decentralized nature of the market, but to improve security. A uniform set of regulations is needed to establish legal order in a market that is currently not regulated. To oversee the activities of main service providers, ICO’s must be implemented within a uniform framework.
These digital financial regulations also include intermediaries, wallet providers and exchanges, as well as other individuals or bodies.