How cryptocurrency can become a globally accepted means of payment
After the challenges it has gone through, it can be confidently said that cryptocurrency is here to stay. This is based on the recent remarkable growth it has recorded. Just a simple as with a tweet from Elon Musk, the price of cryptocurrency continues on the rise.
This has now led to questions among financial experts wondering if it would become a major payment method in the near future. The answer to this is not far-fetched if you look at the blockchain technology.
Fiat currency operates within a blockchain and under the control of the government, which makes it a regulated currency.
Cryptocurrency, on the other hand, doesn’t give monopoly a chance. This now begs the question, who can trust a financial system that is not regulated by the government?
Aside from the fact that trades are a risk pool, cryptocurrency is higher risk as you can lose your money in seconds. This has led to the question: Why can cryptocurrency be accepted globally everywhere, like fiat currency?
Evolution of cryptocurrency
Looking at the evolution of cryptocurrency since 2017, the total number of cryptocurrencies and digital assets on exchanges has increased by over 100 percent (from 617 to 1,335), sending prices through the roof and causing an international outcry.
This led world leaders to take a serious look at the future of cryptocurrency. The answer to the question of whether this is a viable payment method for businesses is already apparent, as major companies have begun accepting Bitcoin.
Large businesses could cushion any shock, but a small or medium business needs to weigh potential profits and problems before you accept it for payments. It is therefore important that you get the right information before your business jumps on the cryptocurrency bandwagon.
Currently, some customers, especially Millenials, use cryptocurrency more than older ones. A statistic provided by Cambridge Center for Alternative Finance shows that between 2.9 and 5.8 million people worldwide are active users of cryptocurrencies.
Since research has shown that Millennials are much more likely to invest in cryptocurrency than previous generations in terms of population, one can see a sign that things can only get better with some changes. The results show that 17.21% of Millennials currently own cryptocurrency, compared to 2.24% of Baby Boomers. Also, most of the users are men.
If your main customers are Millennials or younger generations, you should consider crypto payments; at least it’s fast and you can confirm the payment. This can even make your business attractive, which can also lead to revenue growth.
In the meantime, the only way cryptocurrency can become a globally accepted payment method is with some degree of government control. As it is, the government cannot have total control over it as there is no chance for a monopoly.
What should be done to make cryptocurrency a global means of payment
So, I will highlight some things that need to be addressed to ensure that cryptocurrency becomes like a globally accepted means of payment.
Cryptocurrency is very volatile in price, which makes some companies accept it as a valid means of payment. But they can also change their mind based on price changes. So there is a need for stability. This could be done in an area that will not result in a colossal loss for everyone involved.
It has to be a win-win situation for all. The government needs to step in here to reduce the risk of price volatility by helping companies translate cryptocurrency into fiat currency (sterling, US dollars, etc.) as quickly as possible with merchant services companies. So synergies are needed here.
Although there is no third party in the cryptocurrency business, most businesses use a third party company like BitPay or Cryptopay to access the cryptocurrency market directly and convert payments into centralized money instantly. If there is no instant conversion of cryptocurrency payments, this is a massive gamble on revenue.
Although government regulations on legal and illegal cryptocurrency transactions vary from country to country, while countries like China and Brazil have banned it completely, there is a need for regulation to guide innovation as it is already here to stay.
So, countries need to continue to implement new regulations so that cryptocurrencies can legally operate more.
There is also a need for tight internet security. Since it is an innovation that exists only in the digital sphere, cryptocurrency is vulnerable to cyber attacks. Despite the high level of security that blockchain technology offers, some hackers have found ways to steal many people’s cryptocurrencies, which has led to exchanges creating different types of wallets.
Hackers had managed to access digital exchanges and steal millions of pounds. One example was when hackers stole £380 million of virtual assets that belonged to Coincheck. This means that those who lost their funds will not be refunded.
The problem of anonymity also needs to be addressed. Many have committed crimes with cryptocurrency because their identities are not known. This makes it difficult for police to track down criminals. Even drug dealers are now using it as they no longer carry cash. In a case where some documentation is required to get the identity of a cryptocurrency investor, security agencies will track down such a person who has provided such information during registration. But as it stands, that is not the case.
Cryptocurrency has taken the world by storm after overcoming numerous obstacles and challenges. As a result, the necessary steps must be taken to become a globally accepted means of payment, including taking all necessary precautions to ensure risk reduction.
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Nothing on Cryptinus constitutes professional and/or financial advice. Always think for yourself and make sound decisions when investing. Never invest money that you can’t afford to lose.