Almost exactly a half-decade ago, the first crypto transactions were made, kicking off a whole new industry, and launching a new technology ecosystem.
This technology is as significant as the industrial age, internet, and smartphone revolutions that came before.
Ever since the inception of cryptocurrencies, the global economy is inevitably moving towards a digital ecosystem. From money transfers to investments, everything is becoming paperless. Cryptocurrency has become the newest and most promising addition to the digital payment sector.
So If you are an Entrepreneur planning to invest in this disruptive technology of Blockchain, then working on a Cryptocurrency development solution will fascinate you the most.
In this blog, let me lead you through the amazing journey of What is Cryptocurrency, a few reasons why they are good, how one can create, the mass adoption of cryptos, and the rise of CBDC.
Cryptocurrencies are compared with legal currencies like Dollars, rupees, etc.. Cryptos can be used as a medium of exchange. The transaction data and value is stored on Blockchain and semi-blockchain networks. However, cryptocurrencies have limitations, such as low adoption and high volatility.
Cryptocurrency is virtual money that exists on Blockchain technology. The transactions that are related to these computer-generated currencies are secured by cryptography and are also permanently recorded in the ledger. These transactions are available and auditable on blockchains.
The supply of cryptos is free because it is not controlled by any central authority. They operate on decentralized networks that rely on the consensus of several users to operate.
There are thousands of cryptos available, starting from the famous bitcoin, ethereum, and so on. Each cryptocurrency has unique features that are different from the other. Apart from cryptos, there are other digital currencies such as tokens, NFTs, etc..
Few Important Characteristics Of Cryptocurrencies Vs Ordinary Currencies:
Few Amazing Reason On Why Crypto Currencies Are Good.
Cryptocurrencies are built with blockchain technology, similar to how a car is built with a combustion engine. Over the time, cryptocurrencies have been gaining the public eye. Here are a few good reasons behind it.
When crypto is created, all the transactions are stored in the ledger. The information of the coin owner is encrypted to create the legitimacy of the record-keeping. This is done because cryptos are decentralized, and neither the bank nor the government can control them.
Identity fraudulent activities:
Since all the information is stored in the public ledger, the transactions between digital wallets accurately calculate the balance. The owner of the wallet can check the details of the transactions. The transaction in the blockchain technology takes place through encryption which makes the whole entity a virtual unhackable thing and void of fraudulent activity. So with this high security, blockchain technology is poised to impact nearly everything in our lives.
Blockchain is the only main reason why crypto has value. It is also easy to exchange, trade, and make transactions. This is also one of the main reasons why they are high in demand. To make an instant settlement, all you need is a smart device and internet connection, and you can become your own bank to make payments and money transfers.
There are almost two billion people with access to the Internet who don’t have the right to use the traditional exchange. These individuals are clued-in for the crypto market and start their exchnage. This is mainly because it is easy to enter into the crypto market until one is aware of the basic crypto knowledge.
Mass Adoption of cryptocurrencies
It’s the year 2022, and by now, almost every individual from a family would have invested in crypto, or at least they would have heard about it.
Recently big-players and giant companies all around the globe have made their entry into the crypto space. This is a sure sign of the rising popularity of cryptocurrencies. The market capitalization of crypto is becoming high every year and crosses the previous year’s milestone. As of now, the overall crypto capitalization is reaching about $2 trillion. As for actual crypto price and its usage, predictions for the forthcoming year seem to be optimistic.
Even many countries have adopted and made crypto a legal currency. In that order El Salvador, a Central American country, is the first one to all its people to make a crypto transaction. This was followed by many other countries such as China, India, Hongkong, etc.. and they not only support private digital currencies and also planning to launch their own cryptocurrency, which is backed by the central bank of the respective country.
Form a recent statistic report, nearly 31% of adults do not have a bank account globally. The few that have bank accounts face issues such as transfer fees, account management fees, and all the other fees obtained by the bank. So people wanted a more efficient, economical, and inclusive financial system to address these issues.
All they need is an easy global payment that eliminates the need for the middle man. This is where Central Bank Digital Currencies came as a survivor.
People are on the verge of this becoming a reality with the advent of cryptocurrencies and blockchain. This transformation to the financial system has already arrived, and now it is just a matter of time for it to become mainstream.
Here central bank will mostly play a significant part in this transition. To improve the mass adoption and acceptance of digital currencies, the government should take CBDC as a starting point of the financial revolution and endorse them.
RBI & Other central banks jump into the Bandwagon:
CBDCs is nothing but a digital form of central bank money, which is legal tender backed and created by the central bank that represents a claim against it and not against any payment service provider or commercial bank. These currencies are managed on the digital ledger, increasing the security of transactions between institutions, banks, and individuals.
Form a recent statistic report by the Bank For International Settlement, more than 70% of Finacial institutions are actively researching and in the urge of developing POC for CBDCs. One among them is India. They have revised its budget by confirming that by the end of 2023, it will have its own cryptocurrencies.
Governments can better control tax evasion and other illicit activities through CBDCs. These digital currencies can also help the government for instant transfers of public funds in an emergency situation and also combat money laundering and terror financing.
Ultimately, the adoption of CBDCs will create a flawless operation and significantly reduce operational and technological maintenance costs.
Future Financial Space:
Simply put, “ CBDCs Are In The Horizon.”
As long as there are governments and financial institutions, there will be a demand for that nation’s currency. So while we think that cryptos are the way of the future, we also need to think that they will outright replace the fiat currencies of nations, at least not any time soon.
A good future will be where people have more choices as to which currencies they use to do. This will dictate the level of financial opportunity on the whole. And perhaps, the question at the dinner table will no longer be” what is your banks?” but instead “what is your currency?”
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