Is cryptocurrency the future of digital money-

Is cryptocurrency the future of digital money?

Despite a topsy-turvey year experts believe that cryptocurrency seems to be the future of money. It seems that the increasing acceptance of cryptocurrency in financial systems has contributed to fostering the belief that it is here to stay. The expected growth of the crypto space can attract more users, offering enhanced asset control and broader accessibility. “This year is expected to go through progress, face challenges, and welcome new ideas in the digital money world. Cryptocurrencies were once considered a new and experimental idea, now seem to have become a player in shaping the future of money,” Pranav Srivan Elankovan, co-founder, Crypfi.Io, a cryptocurrency trading platform, told FE-TransformX.Sign Up to get access to the Financial Express Exclusive and Premium Stories.Register NowAlready have a account? Sign in

About eight out of 10 e-commerce vendors in medical devices can offer cryptocurrency-based payments on their website in 2024, as per insights from a survey held in early 2022, by Statista, a market research platform. Reportedly, consumers in late 2021 hoped to use cryptocurrency as a payment method for travel, whereas the industry that focused more on cryptocurrency-based payments was luxury goods. It is believed that efforts by cryptocurrency companies and advocates to raise awareness about cryptocurrency and blockchain technology have been fruitful. This awareness eventually resulted in over 15% considering cryptocurrency as the future of money, 11% as an alternative to traditional financial systems, and another 11% as the future of digital ownership, as per insights from BanklessTimes.com, a market research platform.

Worldwide cybercrime costs can reach $10.5 trillion annually by 2025, highlighting the need for enhanced cybersecurity measures, as per insights from Cybersecurity Ventures. With the seeming rise in cybersecurity threats, cryptocurrency with its user-based key of the decentralised network, provides a safe form of currency exchange. Apart from this cryptocurrency being a digital currency, can be accessed anytime and anywhere. One of the best use cases of cryptocurrency is that it enables quick and cost-friendly exchange of funds. “Blockchain being the underlying technology for digital assets, such as cryptocurrency, can provide a public and transparent ledger of all transactions, which reduces fraudulent activities and prevents the illicit use of digital assets. Also, digital assets can boost financial inclusion and offer modern financial services to the unbanked population around the globe,” Dhruvil Shah, SVP, technology, Liminal Custody Solutions, an automated and digital asset custody and wallet platform, highlighted.

Bitcoin rose above $45,000 on January 2, 2024, for the first time since April 2022, as per insights from Reuters. Reportedly, Bitcoin touched a 21-month peak of $45,532, having gained 156% last year since 2020. It was last up 2.5% at $45,318 but remains far off the record high of $69,000 it touched in November 2021. Apart from this Ether was 1.45% higher at $2,386 on January 2, 2024, having surged 91% in 2023. “Bitcoin started 2024 on a strong note as it surpassed the $45,000 mark for the first time since April 2022. The overall cryptocurrency market capital reached the $1.75 trillion mark with Bitcoin and Ethereum leading the effort. The expected optimism around the ETF approval by the SEC can drive the current market rally as its approval is looked forward to,” Shivam Thakral, CEO, BuyUcoin, a digital asset exchange, said.

The road ahead

Experts believe, despite the failure of privately issued cryptocurrency, other parts of digital money such as central bank digital currency, tokenised deposits and regulated stablecoins might bring payment innovation. “Tokenised deposits can reduce settlement risk through end-to-end atomic settlement for payment process. Transparency and programmability are also inherent to transactions enabled by tokenised deposits. Central bank digital currencies(CBDCs) especially Wholesale CBDCs are gaining ground in cross-border trade and capital markets,” Sharat Chandra, co-founder, of India Blockchain Forum, a blockchain platform, explained, adding that the future of the monetary system can see a co-existence of CBDCs, tokenised deposits and well-regulated stablecoins.

Reportedly, Scott Melker, cryptocurrency trader, highlighted in Crypto News, that Bitcoin could surge to $54,000 in the next few days once the SEC approves the ETF. Furthermore, BTC can  rise to $50,000 within a month after passing the BTC spot ETF in January, as per insights from Matrixport. 

As the global landscape explores digital currencies, the expected benefits of faster payments and reduced international transfer costs highlight the transformative possibilities. However, concerns such as too many digital currency options, a steep learning curve, transaction costs, price volatility and the slow progress of a United States (US) CBDC, among others,  underline the complex journey ahead. “Overall, the current cryptocurrency market can be bullish, especially as the Bitcoin(BTC) halving event approaches and traditional institutions’ investment interest in BTC increases. However, cryptocurrency market has high volatility. Although there are opportunities to achieve wealth effects, there are also greater market risks,” Ryan Lee, research chief analyst, Bitget, a crypto trading platform, concluded.

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