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The library of essays of Proakatemia

Cryptocurrencies and the Future of Money



Kirjoittanut: Miika Hautamäki - tiimistä Ei tiimiä.

Esseen tyyppi: Yksilöessee / 2 esseepistettä.
Esseen arvioitu lukuaika on 3 minuuttia.

Cryptocurrencies and the Future of Money 

 

During the last decade cryptocurrencies have gained a lot of popularity and they are getting used in more places day by day. The most popular cryptocurrency is Bitcoin which was created in 2009. Since then there have been a lot of cryptocurrencies that have tried to do the same as bitcoin and gain a similar popularity that they have managed to gain during the years, but most of the attempts have failed and the cryptocurrencies have fallen down after a while. Collectively all of the cryptocurrencies that are still running have gained a value estimated to be over trillion us dollars. Most of the times these cryptocurrencies are still thought to be investments and sometimes people can be also be seen buying some services or material stuff with it. (Siripurapu, Berman 2023) 

 

Cryptocurrencies have the ability to shake the global financial system which is seen as a threat for the big national banks, which is also the reason that these banks are planning on to bring their own digital currencies that are called Central Bank Digital Currencies (CBDC’s) and they are bringing them to compete with the other digital currencies in the world. These digital currencies are bad for the big central banks because it is affecting the printing of money when people are starting to just use digital currencies. Which basically means that the digital currencies are bringing down the value of the actual money. On top of that these digital currencies still have barely any regulations affecting them which is really bad, the lack of the regulations empowers a lot of illegal drug traffic, terrorist organizations etc. The regulations varie all over the world and there should definitely be certain rules that are put on them and they need to be complied with everywhere in the world. These currencies have the ability to be transefered from one place to the completely other side of the world really quick without a fee and it can also be done anonymously, this is probably one of the reasons that they are so used by terrorist groups for example. (Siripurapu, Berman 2023) 

 

People buy digital currencies like Bitcoin for the belief that the value of the coin is going to sky rocket in the future and their investment is going to make them a lot of money. During the pandemic it has showed that this certainly might not be happening anytime soon since the value of many digital currencies plummeted during the pandemic when the biggest hype of the currencies was calming down. This plummet resulted for many people in big losses of money because they had put a lot of money in the currencies waiting for them to blow up even more than they did. Amongst experts views regarding digital currencies tend to be polarizing.  This is due to the wide spread uncertainty regarding digital currencies and due to people resulting in more concrete forms of investing when the market is at a downturn. When looking at what the future holds, I believe that the truth lies beneath the framework of digital currencies or digital forms of monetization which might end up to be built upon the framework of existing digital currencies. A common misconception is that digital currencies are not as secure as traditional forms of payment and whilst there have been some instances of hacking or fraud the underlying blockchain technology is far more secure than the security beneath the traditional methods of payment. This is one of the key reasons why I believe that digital currencies will end up to be in one form or another, one of the mainstream payment methods of the future.  

 

How long will this take? As mentioned, when looking at global trends whitin the economy, and investing in general, with the current downturn we are facing people tend to invest in items they are familiarized with. People want to take certainty as one form of assurance for their investments and tend to sway away from riskier decisions. This I believe explains one of the reasons why investing in cryptocurrencies is not as “cool” as it once was. However these do not take away from the technology that is beneath the surface which I believe will profoundly change the way money is dealt with.  

 

 

 

Sources :  

 

Siripurapu, A. Berman, N. 2023. Cryptocurrencies, Digital Dollars, and the Future of Money. Read on 15.11.2023 https://www.cfr.org/backgrounder/cryptocurrencies-digital-dollars-and-future-money 

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