The introduction of money leads to different situations. Indeed, it solved some separate issues during the transactions. Some felt the money was unnecessary. Although, it evolved and now showing a new format! It is now cryptocurrency.
Like before, cryptocurrency is going through wiry scrutiny. Yet, everyone does have a question in their mind- Is cryptocurrency bad for the national economy? It will be our theme for today!
Cryptocurrency is digital money. There are many versions of it. Certainly, bitcoin is having a good day among them. If someone has a powerful computer, they can digital money and store that in their respective crypto-wallet. We saw ups and downs of it. But will be the causes of concern? Let’s go for a brief analysis.
Hackers have successfully stolen crypto money previously. In 2019, the hackers stole $30 million1 in digital tokens from South Korea’s Bithumb exchange. Unlike the bank heist, there is no way this money is traceable. Equally important, they had strong security, yet the thieves are advance than that. It can happen again.
It is one of the primary concerns of the authorities. When it’s connected to the public, that becomes a national issue. With the boom of the crypto world, governments are trying to find alternate ways of added security.
On the other hand, anyone with limited cryptocurrency in the digital wallet is not safe! It’s always the end-user who needs a bit of education and awareness. I only mentioned one big hacking news.
More small incidents are also not reported for classified reasons. Until the abundant security arrangement, the government will work with people’s safety. It will make the general acceptance of cryptocurrency more onerous.
No Central Authority
The important thing is- cryptocurrency doesn’t have any central authority. That’s why the price constantly fluctuates2. A notable peculiarity is that cryptocurrencies are not issued.
People can mine the cryptocurrency to a limit. Therefore, the price is settled by the ‘supply and demand ‘of the situation. For digital money investors, the cryptocurrency exchange is the most important means of transaction.
Cryptocurrency exchanges are platforms utilized to purchase and trade cryptocurrencies. To deal with digital money holdings, they must use digital money exchanges. If regulated by the government, the money is protected.
The financial model of cryptocurrency is a bit dark. You only perform trading with it. You won’t be able to get loans or get interest or profit from it. Now, if we consider Bitcoin, it only can exist 21 million in numbers. After that, no one can mine it. That means- when the number comes, there will be no new bitcoin. Unlike in a gristly situation, a bank can print money to the public’s damage control. You can expect with the cryptocurrency.
Additionally, these digital currencies don’t have any central monitoring system3. Any competent person or organization can easily manipulate it. On the negative side, this strength to constantly generate cryptocurrencies will reduce their usefulness over time. It is why digital money is not a playground for ordinary people. Particularly, the uncertain nature of cryptocurrencies further suggests their unstable reality. The effect will be dangerous for the public.
The cryptocurrencies are untraceable. Yes, with a quantum computer, security researchers may able to identify a fraud transaction. Yet, this is not practical. It’s a common practice to use cryptocurrency for criminals, terrorists, etc. They use it to conceal their identity.
The money trail is tough to locate by the police. It is also a reason why governments are trying to have a more compact environment for cryptocurrencies.
Suddenly, to be practical and used by the community, some changes4 are needed. We always want security and certainty in our daily life. If these cryptocurrencies can acclimate and use new strategies, we can state the following statement. No, crypto money is not bad for the national economy.
- Stolen $30 million: Retrieved from the .investopedia.com website. https://www.investopedia.com/news/largest-cryptocurreny-hacks-so-far-year/
- Constantly fluctuates: Retrieved from the consumer.ftc.gov website. https://www.consumer.ftc.gov/articles/what-know-about-cryptocurreny-and-scams
- Central monitoring system: Retrieved from the loc.gov website. https://www.loc.gov/law/help/cryptocurrency/world-survey.php
- Some changes: Retrieved from the finextra.com website. https://www.finextra.com/pressarticle/84270/banks-governments-and-crypto-industry-divided-on-cryptocurrency-risk