The modern finance and investment world is changing rapidly, not least because of the development of blockchain-based “cryptocurrency”. You may have heard of Bitcoin, Ethereum, or other cryptocurrencies making waves online, but they are not widely accepted when it comes to mainstream banking. This article looks at what the future might hold for our finances and whether something as newfangled as cryptocurrency might one day become the new normal for everyday transactions.
Cryptocurrencies come with some unique benefits when it comes to day-to-day transactions. For one, they can be transferred quickly and cheaply around the world, eliminating the need for traditional banks to act as middlemen by facilitating transactions. This could potentially be a game changer for both businesses and individuals who have to make international transactions regularly, i.e. to send money abroad to relatives. Additionally, cryptocurrencies typically provide a higher level of privacy and security than traditional banking.
Although holding and using cryptocurrency is not entirely an anonymous process, the lack of a middleman means there are fewer entities through whom your personal and financial data has to be transferred. Finally, because they are not controlled by a government or central bank, some cryptocurrencies can be more stable in countries with volatile economies or currencies. You should do your due diligence by investigating phenomena like the "Coinbase effect" before choosing a day-to-day or long-term cryptocurrency, and it can also help to stay updated with MEXC listings, and new crypto coins shortlisted by Michael Graw.
One of cryptocurrency’s main downsides is its potential price instability. A cryptocurrency’s value can fluctuate substantially in a short period of time, making it risky to use for day-to-day transactions. Another major difficulty when using cryptocurrency is a distinct lack of businesses that are currently willing to accept it as a form of payment. For now, it would be strongly inadvisable to leave your house without some cash or a credit/debit card, as you may find yourself in hot water when it comes time to pay up! Similarly, because the concept of cryptocurrency is still very new, the general public may find the idea of adopting it into their everyday lives too complicated or confusing.
There is also growing concern about the environmental cost of using cryptocurrencies long-term. Some cryptocurrencies, like Bitcoin, involve a process known as mining, which needs a significant amount of computer power and energy and thus creates a massive carbon footprint. However, there are newer cryptocurrencies in development that employ more energy-efficient technologies and as a result, produce fewer carbon emissions.
Although it’s certainly interesting to try and picture a world in which cash is completely obsolete and all transactions are crypto-based, it’s more likely that the future will be something in between. It may be that cryptocurrencies coexist with traditional forms of money, each fulfilling a unique role. For example, you may prefer to use cryptocurrencies for secure and private online purchases but still keep cash on hand for the local lemonade stand!
