Cryptocurrency: A Blessing or a Curse
As mentioned in previous articles, cryptocurrencies are virtual currencies that use blockchain technology. Due to their recent popularity and increasing demand, cryptocurrencies have been widely debated amongst the media. Many believe crypto will further benefit the global economy, while others think it will tear it apart.
Before diving into this debate, it is important to know the basic information regarding cryptocurrencies. Cryptocurrencies are based on blockchain technology, which records all transactions (e.g. money transfers) using a shared database that is accessible to everyone. This may sound like personal privacy may be at risk, but it is actually quite the opposite. All accounts and information are anonymous; it is impossible to identify the payment's sender or receiver. Although many of these characteristics sound beneficial, there are concerns that the rise of crypto could cause crime and harm in the long run.
One of the most valuable traits of cryptocurrencies is that they create a universal currency. This means that eventually, instead of having countries with different currencies (dollars, pounds, euros, etc.), all countries will be able to use one global currency. This has the potential to greatly decrease international conflict caused by exchange rates and make international trade much more efficient. In addition, the development of cryptocurrency allows for the easy transfer of funds between different accounts without using a third party (such as a bank) as a middleman. This decentralized system would decrease transaction fees and provide instantaneous transactions all over the world, while also increasing privacy and security. With all these advantages, it’s no wonder why cryptocurrencies are so popular among investors and digital entrepreneurs. However, the ability to transfer money anonymously has a downside.
Cryptocurrency is used as an outlet for many crimes, such as money laundering and tax fraud. These crimes are made even harder to track with crypto since they are anonymous and do not require a physical connection. Crypto tax fraud is particularly dangerous because it takes advantage of the lack of transparency in the blockchain network and uses digital currencies to conceal payments from government authorities. Aside from crime, there are concerns that the increasing popularity of cryptocurrencies could lead to more volatile markets and decrease the value of existing currencies over time. The use of crypto-currencies could also lead to the extinction of national currencies completely. This makes it hard for countries with minimal internet access to stay competitive in a global market. In addition, it would be difficult for countries with weaker economies to enter the industry, since they require expensive computers and complex programming knowledge to develop their own cryptocurrencies.
While cryptocurrencies offer many benefits to both businesses and consumers, they also have disadvantages that could affect the economy as a whole. With this in mind, is cryptocurrency worth it?