Crypto has always caused a polemic argument ever since its inception with the likes of Bitcoin. With fervent supporters on one side and sceptical critics on the other, the fundamental nature of money, centralisation, and the future of transactions is hotly debated.
The battle for legitimacy in crypto rages on. On the one side is much of the legacy financial system, including governments, central banks, banks, and global financial agencies. On the other side are incredibly entrepreneurial and tech-savvy teams and individuals who are building out financial protocols and services, and a plethora of other use cases.
Disadvantages of Cryptocurrencies
Detractors emphasise certain challenges tied to digital currencies:
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Volatility: Cryptocurrencies can be notoriously unstable, with prices that swing widely in short periods.
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Lack of Regulation: Without centralised oversight, illicit activities have found a shelter in some corners of the crypto world.
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Technological Barriers: Crypto transactions require a certain tech-savviness, potentially alienating those not familiar with the digital world.
Advantages of Cryptocurrencies
The potential societal benefits are vast:
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Financial Inclusion: Billions globally lack access to traditional banking. Cryptocurrencies offer a chance for these individuals to engage in global commerce.
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Lower Transaction Costs: Without middlemen, many crypto transactions can be cheaper, faster, and more efficient.
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Transparency and Security: With blockchain, transactions are transparent and immutable. This can reduce fraud and corruption.
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Decentralisation: Cryptos diminish the control of central banks, allowing individuals greater autonomy over their wealth.
Future Applications of Cryptocurrencies
Beyond mere transactional values, the future of cryptocurrencies paints a picture of innovation and societal growth:
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Smart Contracts: These are self-executing contracts with the terms directly written into code. They can revolutionise industries from real estate to music, ensuring trust without intermediaries.
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Decentralised Finance (DeFi): This aims to recreate traditional financial instruments in a decentralised architecture, away from corporate banks and brokerages.
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Identity Verification: In the future, blockchain and cryptocurrencies can provide indisputable identity verification processes, ensuring safety and reducing identity theft.
Will regulators get it right?
While the debate around cryptocurrencies and their role in our society will persist, it's undeniable that they hold considerable promise. However, persistent scams and fraud have bedevilled this industry, although this is probably to be expected, given that the sector is pushing out the frontiers of technology.
Financial authorities around the world are currently developing the regulatory structures with which to govern crypto. Given that the vast majority of those building out the rules are themselves from the legacy financial system, one that is failing ordinary citizens, it is to be hoped that the regulators are not permitted to stunt and smother crypto’s promising technological innovations.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
