There are 180 currencies identified as legal tender in United Nations (UN) member states. Unfortunately, cryptocurrency isn’t one of them.
For the uninitiated, cryptocurrency is not controlled or owned by a bank or a country. They are definitely not issued by the central bank of the country (the Reserve Bank Of India in our case) as legal tender.
Crypto is a thriving ecosystem that has gradually progressed as one of the world’s conventional financial systems. However, cryptocurrency traces its existence back decades when it began advancing into the digital era.
With the help of technology, cryptocurrency adopted various encryption techniques that make its networks strong and reliable for distinct transactions.
Statistics reveal that various cryptocurrencies have increased by 66 million between 2018 and the last quarter of 2020. Now, with 5,000+ cryptocurrencies, here’s why cryptocurrency is called the future of trading.
What is Cryptocurrency?
A cryptocurrency is a virtual or digital currency secured by cryptography, making it nearly impossible to forge or double-spend. The word ‘cryptocurrency’ is obtained from the encryption methods that secure the network.
Many cryptocurrencies are decentralized networks based on blockchain technology, a shared ledger supported by a diverse network of computers.
Many specialists maintain that blockchain technology will intrude on many industries, that includes finance and law.
However, the spotlight feature of cryptocurrency is that it doesn’t belong to any government, so it is immune to manipulation.
When used, they make secure payments online that are denominated in virtual ‘tokens’ designated by ledger entries internal to the system.
Why is Cryptocurrency called the Future of Trading
There are many reasons why trade experts think that cryptocurrencies could be the future of finance, but I have listed six speculations that many are prophesizing about.
Transactions done using cryptocurrency can’t be forged or changed as they are transferred in extremely high-security networks. However, for those wondering, the financial records can still be traced if proof of transaction is needed.
In addition, cryptocurrencies make the transfer of funds directly between two parties easier, which doesn’t need a trusted third party such as a bank.
Said transfers are secured using private keys and public keys, along with the different incentive systems, like Proof of Work. Cryptocurrency systems operate wholly on a user’s ‘wallet.’
It has the account address, a public key, and the private key is known only to the owner and is used to execute transactions.
Ergo, fund transfers are accomplished with minimal processing fees, which is helpful seeing how banks are charging steep fees for wire transfers.
When it comes to privacy, cryptocurrencies are privacy-enabled, thanks to their system, which is powered by different cryptographic systems.
Users can stay anonymous while transacting due to said cryptographic techniques. Moreover, these methods of secure data protection don’t let information fall into the wrong hands. You see, all the data that is transmitted is completely hidden from unauthorized persons.
3. Investment from the who’s who of the world
If you are abreast with the current news, you might know that Tesla’s ‘TechnoKing,’ Elon Musk, invested $1.5 billion into Bitcoin, the most well-known cryptocurrency.
After doing this, he updated his Twitter bio to include Bitcoin. Moreover, Tesla has also announced that customers can now buy their vehicles using Bitcoin. Elon Musk is also a leader of the meme-coin Dogecoin.
Apart from Musk, many prominent names have joined the party. That includes two of the biggest platforms for making payments worldwide – Visa And Mastercard, both of whom have openly endorsed the use of Bitcoin.
In addition, Visa is allowing transactions with stablecoins on the Ethereum blockchain. PayPal has also jumped on the board for cryptocurrency.
While making payments, PayPal users can make transactions with cryptocurrencies such as Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. Although you can’t just transfer your coins to a private wallet, this feels like a step forward in the finance sector.
4. Convenient Payments
The pandemic has brought the world together, and now, many people work for overseas firms. However, handling the payrolls of people from various parts of the world is a bit tricky.
Here’s where cryptocurrency can save the day! Firms can convert your dollars into dozens of international currencies to pay their employees.
Cross-border transactions are a pain in the neck, but instantaneous transactions across borders are now a reality with cryptocurrency, with minimal-to-no fees.
Moreover, Bitcoin transactions being public, all individuals can view the transaction details and instantly know the status. This cuts out banks and the likes that save companies and employees money which can mean something for the workforce.
5. Business Equity
Nowadays, giving early employees shares of the company profits is a current trend we see in the modern business world.
However, with the rise in the growth of cryptocurrency, new employees can be provided with a ‘company cryptocurrency as equity shares. This could mean a metamorphosis in the financial field or an enormous setback for the investors who have made their fortune off crypto.
6. Raising Capital Crowdfunding can become transparent
In the era of the internet, helping our fellow humans has become quite easy. Recently, a meme channel garnered $5 million to help the people of Afghanistan to emigrate.
With cryptocurrency, fundraising can be done transparently, making sense as people can publicly ask for funds and explain why.
But keep in mind that crowdfunding with a dedicated blockchain wallet will keep the total contributions open to the public.
Moreover, it will allow the fundraisers to avoid fees from third-party platforms without sacrificing the donors’ trust. A crypto wallet also allows all parties to see how many donations have come in.
7. Disadvantages of Cryptocurrency
Cryptocurrency is semi-autonomous, which is concerning in terms of privacy benefits such as protection for activists living under authoritarian governments or whistleblowers.
In addition, some cryptocurrencies are more isolated than others. For instance, Bitcoin is susceptible to getting discovered for conducting illegal business online as its forensic review of rhe blockchain has helped authorities arrest and indict criminals.
However, there exist 7 such privacy-oriented coins – Monero, ZCash, Dash – that are far more difficult to track.
Another disadvantage of cryptocurrencies is that they don’t have any inherent value. It is true – the world decides its value. Nonetheless, the same could be said for worldwide fiat currencies long walked away from the gold standard.
How can you buy Cryptocurrency?
One can easily purchase Cryptocurrency. For example, Bitcoin is available for purchase with U.S. dollars, while others will require payment with bitcoins or any other cryptocurrency.
To buy cryptocurrencies, you’ll require a ‘wallet’ that can hold your currency. Usually, you can create an account on an exchange, and then you can transfer real money to buy cryptocurrencies, such as Ethereum or Bitcoin.
An increasing number of online brokers offer cryptocurrencies, such as Tradestation, eToro, and Sofi Active Investing.
You can also try Coinbase, another popular cryptocurrency trading exchange that lets you create a wallet and buy and sell Bitcoin and other cryptocurrencies. Also, a growing number of online brokers offer cryptocurrencies, such as eToro, Tradestation, and Sofi Active Investing.
The topic of Cryptocurrency in India
Cryptocurrencies aren’t legal in India, nor are they regulated. But, its popularity is growing among Indian investors. This is because these currencies are known to disrupt the central bank model of transaction and trading.
As a result, numerous startups have begun operating in the blockchain and cryptocurrency space, which is evident from the Indians who have invested over $6 million in them – made by almost 1.5 crore Indians.
When the Monsoon Session was in Parliament, the cryptocurrency bill was expected to be tabled, but that did not happen.
Instead, many reports suggest that the panel supported that all private cryptocurrencies be prohibited in India, but virtual currencies dispensed by the state may be allowed.
In April 2018, the Reserve Bank of India (RBI) brought out an instructional notice to ‘all the entities regulated by it not to deal in cryptocurrency.
Still, in 2020, the Apex Court lifted the ban and allowed banks and financial institutions to provide services even if it meant dealing with digital currencies.
The cryptocurrency bill will be coming, which indicates the Deputy Governor of RBI’s statement wherein they were considering ways to bring out a Central Bank Digital Currency (CBDC).
Therefore, Crypto supporters are sure that there might not be a blanket ban on cryptocurrencies.
As mentioned before, cryptocurrencies are under no statute in India, which puts them under a grey area for Indian investors.
However, the government has recognized that crypto assets are not a threat to the national currency. And it fits in the new world of the global fintech industry, which is gradually growing.
Crypto has sprawled up around digital currencies, and with over 15 million people trading in them, the government should legitimize it.
Is cryptocurrency real money?
Yes, cryptocurrency is real money. It can be used as digital assets for online purchases and even investments. Another popular usage is exchanging real currency, e.g., dollars, to buy ‘tokens’ or ‘coins’ of a specific kind of cryptocurrency.
Lastly, you can exchange your real money for crypto and use it just like real money, provided it is accepted as a type of payment at places.
Are cryptocurrencies legal in India?
Cryptocurrencies aren’t still legal in India. They are also unregulated as of now.
However, the Indian government plans to bring in the “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021,” which would give some information on the government’s stance.
Why is a cryptocurrency called the future of trading?
Cryptocurrency makes access to formal financial services easier. As a result, there is also an increase in demand, and the accessibility of cryptocurrency exchanges is frequently raising the popularity of various DeFi systems globally.
Does cryptocurrency have a future?
Cryptocurrency definitely has a future, future of payments to be more accurate. But, it isn’t ready to replace paper money as it has many hurdles to face.
Which are the best crypto to buy in 2021?
Following are the best crypto to buy in 2021 –
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Dogecoin (DOGE)
- Cardano (ADA)
- Ethereum (ETH)
- Polkadot (DOT)
- Binance Coin (BNB)
Is crypto a good investment?
Investing in cryptocurrency is a risky business but also profitable. If you want to gain direct exposure to the demand for digital currency, then crypto is a good investment.
Alternatively, you can buy the stocks of companies with exposure to cryptocurrency, which is a safer but probably less profitable option.
It would be best if you now had an idea of why is Cryptocurrency called the future of trading. Unfortunately, many worlds still lack access to orderly financial services, which puts the red carpet for cryptocurrency as a solid and viable solution.
As you might know, conventional banking requires documents for personal identification to open accounts and operate funds.
People who cannot open bank accounts can now take advantage of this financial guide with quick access from anywhere, fast processing of transactions, etc.
In addition, blockchain technology can likely obstruct the traditional financial policies that need an entrusted third party to investigate, validate and approve transactions.
When the technology develops more it already has, many other quarters may recognize and accept cryptocurrency as an acceptable form of the financial system.
As a consequence, cryptocurrency could become the new conventional financial system in the future.
Moreover, its semi-anonymous kind doesn’t make it convenient for many illegal activities, such as money laundering and tax evasion.