In the past few years, cryptocurrencies have become a worldwide phenomenon. Still, there is a lot we don’t know about this ever-changing technology. People still have several fears and worry about technology and its ability to interrupt the traditional financial systems.
According to some experts, cryptocurrencies might be just the answer to solve several problems facing the current traditional financial systems. According to others, it is nothing but bad news that will push the financial world to ruin. Among the many questions surrounding technology, one of the most important ones is, what does the future hold for cryptocurrencies?
The truth about truthless systems
According to lovers of cryptocurrencies such as Bitcoin refer to them as truthless systems. This simply means that cryptocurrencies are not directly tied to a country, state entity, or government. They claim that crypto offers the world something better than the traditional or physical currencies because it doesn’t depend on any country’s federal government.
According to some experts, crypto is not as independent as people think. They still depend very much on infrastructure powering crypto, such as Bitcoin, mainly situated in China. The Chinese government could choose to make some fundamental changes to cryptocurrencies that could affect the miners responsible for running them, much to the detriment of trading sites like Bitcoin Prime.
When Facebook launched its cryptocurrency, Libra, many people considered it the answer to several financial problems. The platform was primarily designed to process international transactions and remove any costs and fees associated with it.
While Facebook’s attempt is considered admirable, some experts think the tech giant’s approach is deeply flawed. According to them, launching another cryptocurrency is not the answer to minimizing transaction costs. They also see no point in trying to eliminate the need for traditional banking systems.
Experts argue that, instead of creating a new cryptocurrency, Facebook should have built its bank to become its top financial company for its users. Facebook should create banking systems suited to each nation or state to deal with problems with transaction costs. After establishing its financial institution, it should build public trust; Facebook can then link its users’ accounts and create a worldwide network.
Can a stable coin be the answer?
With the introduction of stable coins, many analysts began to view the coins to provide a backing for cryptocurrency with assets that possess actual value, in much the same way the US dollar had gold standard as its backing. The assets that could serve such a purpose could be anything such as other currencies or even commodities.
Despite how good this idea sounds many analysts still worry about it. For instance, this system of backing for cryptocurrencies is already in place with the current traditional financial system. Another worry about this system is that it makes it even easier for individuals to commit financial crimes because it is difficult to track and audit than traditional currencies.
In conclusion, cryptocurrency might offer some solutions to many of the world’s financial problems; it also comes with its disadvantages. We cannot overlook benefits like being better for people in nations with weak currencies to buy and save up in Bitcoins than purchasing local bonds or stock.
Still, the future of cryptocurrencies is very much uncertain. Supporters of crypto see the endless potential it holds. In contrast, critics see nothing but a new disaster that threatens the world’s financial system that has worked for so long. No matter your position, everyone can’t help but admit that if the current economic system is to get better, cryptocurrencies can play a viable role.
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