Cryptocurrencies have become the new buzzword in the world of finance, and the groundbreaking blockchain technology on which it is based is finding application in many business avenues that were hitherto untapped. A cryptocurrency is nothing but a digital currency that can be used for online transactions. The coins can be stored in electronic wallets or files and password-protected.
Ways in which the digital currencies can change the world:
- To begin with, digital currencies can guarantee faster transactions as compared to banks. International bank transfers are known to take a while and even cross-border payment data sharing has its own challenges and drawbacks. Using a cryptocurrency like Bitcoin has its advantages because transfers can be made securely and quickly. Here is a brief bitcoin profit review where you can find some bitcoin revelations.
- Migrants from the developing countries transfer more than $500 billion as remittances. As the total charges for international transfers are about 10% to send $200, the load on vulnerable populations is huge. However, the blockchain technology can make such transfers much cheaper; private users will be able to send funds to their families back home directly through mobile phones.
- With the growth of mobile technologies in Africa, these developing nations have proved that they can also be leaders of advanced technology. According to reports, about 66% of trade in Kenya happens through phones; anyone with phone can store money and transfer credits to others. But the fees entailed are huge and digital currencies can help resolve this problem. They will become a secure and convenient payment platform for countries where most people do not have accounts in banks. Although Bitcoin does expose people to some risks, these outweigh the existing options.
- Digital currencies will help to unleash the true power of ecommerce. Concerns about frauds online are making many online merchants apprehensive. Since such frauds have become commonplace, many companies stay away from accepting international payments. But with Bitcoin and other digital currencies, transfers once made cannot be undone. This helps to eliminate risks of fraud and enables them to sell their goods worldwide. Moreover, it makes online shopping experiences smoother and hassle-free. This helps smaller businesses in the developing nations to play a bigger role in the world of ecommerce.
- When an asset is digital it is possible to move it through automated ways; this makes it possible to have “smart contracts” and “programmable money”. For instance, escrow accounts are used for large deals like property deals and when money is put into it by the buyers, it goes to sellers directly at the time they hand over the property. In a digital age, the problem of trust is usually the biggest deterrent for transactions across distances. However, use of cryptocurrencies can help small sum transactions. Another example is that of multisig wherein money gets disbursed from one account only when it has been authenticated by multiple individuals. This helps to stop digital fund thefts and ensures that money does not get stolen or “lost” when getting transferred across borders.
These are the various ways in which digital currencies can revolutionize the world of finance, and change the world as a whole. Cryptocurrencies will help to bring more stability to the unstable fiat currencies. They may even phase out the entire currency exchange system and offer people greater control over their own funds.