Image credits: The Indian Express
As the value goes up, heads start to swivel, and sceptics soften. Starting a new currency is easy. Anyone can do it. The trick is getting people to accept it because it is their use that gives the 'money' value. — Adam B. Levine
Adam B. Levine is the CEO of Tokenly and the founder of Let's Talk Bitcoin. His cryptocurrency quote reminds us about the importance of the public adoption of new currencies whenever such assets are presented in the market. More importantly, Adam says that people should start using Bitcoin daily.
Cryptocurrency is a digital or virtual currency that uses cryptography (The study of secure communication methods, such as encryption, that only the message's sender and intended recipient can access, is known as cryptography.) for guaranteeing security. A defining feature of a cryptocurrency, and allegedly its most endearing allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.Decentralisation through Crypto Bitcoin is the most prominent cryptocurrency used as a global payment system.
Earlier the barter system was prominently used for trade then gold was used as the medium of exchange. Eventually currency (currency notes and coins) came into existence the government devised a system of collecting all the gold from the people and storing it as the state’s asset. The people were given receipts in return of the gold given. The state levy control over its citizens, people unaware of their rights and enslaved by the idea of being inferior or in need of someone to control them, surrendered. Eventually, this scenario changed people are no longer bound by the idea of being controlled but by being free and independent.
Decentralisation of the financial sector has been the highlight of recent times. There are several reasons for this, but the primary one is that it allows for more competition and innovation in the marketplace. This can lead to better products and services for consumers and businesses alike. There are several different ways to decentralise the financial sector. Digital technology used in a decentralised market enables buyers and sellers of securities to transact with one another directly rather than at a traditional exchange. With the aid of technology, investors can transact with one another directly in a decentralised market as opposed to doing so through a centralised exchange. Decentralised markets include online marketplaces that use cryptocurrencies or other forms of decentralised money.
Cryptocurrency with its decentralising nature makes it appealing to many people who are looking for alternatives to the traditional banking system. The essential feature of the Bitcoin network is decentralisation, which attracts many investors to this virtual money. Decentralisation is essentially one of the main benefits of Bitcoin. In this method, the Bitcoin network is protected and maintained by thousands of computers. This implies that if one machine fails, the network won't be affected.
Furthermore, this system is open since blockchain generates a ledger that contains information about each Bitcoin transaction. The decentralisation of the financial sector can have several benefits. It can lead to more competition and innovation, which can benefit consumers and businesses. It can also help to reduce the risk of financial crises by making the system more resilient. Overall, the decentralisation of the financial sector is a trend that is likely to continue. It has several potential benefits; with some risks it is accompanied with.
Example of Crypto currency helping in decentralisation: in a regular scenario if a person wishes to withdraw his money from the bank, he won’t be able to withdraw the entire amount at once due to the bank’s policies but Bitcoin and its derivatives use decentralised control instead of centralised digital currency and central banking systems, it belongs to people and is in full control of the concerned party without the outside influence of anyone. Earlier the government issued certificates in exchange of the gold submitted with it by the people, these certificates claim to possess a specified value of the gold deposits. Here the entire control and possession of people's assets in the hands of the government, which makes no sense, decentralisation helps in dealing with such issues and giving the control to the people.
Cryptocurrency: A Trump card
Cryptocurrency can be revolutionary, it can help people in innumerable ways. It can help even countries that are suffering from serious debt problems and help them find an avenue to escape it. Consider an example of Pakistan, if the profit that the state gains from big projects like Mohamand Dam Project, Bahria Tower Building, CPEC ( China-Pakistan joint venture) is invested into bitcoins it can earn huge profits and help the country find a way out of the debt trap. A famous Pakistani television host, activist, and cryptocurrency expert/entrepreneur Waqar Zaka, advised and insisted the government to adopt the system of bitcoin as he believed it can take away most of the burden of the economy, when the inquiry was done he found out that Crypto is popularly known to be illegal in Pakistan, he decided to sought the reason for it and went to the court, on realising his affluent and influential status, the court said that if he wishes to buy the bitcoins he can but not from the bank but it won’t be available to the general public, he was informed that there is no law which makes digital currency illegal.
The eminent reason why crypto isn’t widely unacceptable is ‘trust’. People all around the world fail to develop trust in technology, in countries like India, Pakistan, Bangladesh, etc., it’s difficult to adapt to crypto as the trust of the masses still lies in the old school methods and technology. It becomes difficult to change and trust something that you can’t see, there’s a sense of uncertainty and hence adapting to technology doesn’t seem like a viable option at times. Most Indian investors are still wary of making cryptocurrency investments, mostly because of frauds, a lack of knowledge, and some common misconceptions about the currency.
Foe disguised as a friend?
The value of cryptocurrencies is highly volatile and the prices are continuously changing. You never know when your cryptocurrency trades or balance will spike or fall. the value of cryptocurrencies can even decrease to zero. There is liquidity risk, a possibility that trades cannot be settled, may be difficult to settle, or can be traded only at significantly adverse prices depending on the market situation and/or market volume. This makes them a risky investment. The future of cryptocurrencies is uncertain. They could become mainstream financial assets, or they could be relegated to the fringe of the financial system.The government or central bank does not support cryptocurrencies in any way. The value of a cryptocurrency is unrelated to commitments made by a government or central bank, unlike the majority of traditional currencies like the US dollar or teh Indian Rupee. You don't have the same safeguards as a bank account if you store your cryptocurrency online. There are some risks associated with decentralisation through Bitcoins. For example, it can make it more difficult for regulators to supervise the system and protect consumers. There is also the potential for fraud and abuse.
All that exists in the world from a needle to cryptocurrency has its pros and cons, there’s no definite way to identify the right or the wrong time to espouse the idea of digital currency. Gold is an important commodity and has a huge market value. People invest in gold during difficult times but during covid, all these investments proved to be useless as there was no way to sell it and obtain the money to fulfil the current needs. So in times of emergencies, even a precious metal like gold becomes useless, reviving the idea of ‘modern problems need modern solutions’ ; it's a necessity to change with time. Bitcoin can prove to be way more convenient and useful in contemporary times. Bitcoin which is technically digital gold provides a sense of security and assurance as one can easily sell or buy it at any given point from anywhere in the world
It comes with its benefits where it can prove to be of great help and can solve even international riddles, on the other hand, it’s accompanied by the uncertainties and risks of scammers and hackers, technical complexity, threat of regulation, and many more. Only time can unveil the truth and provide a better understanding of the topic.
BY ARIBA SHUAIB
Ariba Shuaib is a second-year student of B.A(H) English at Hindu College, DU.