Thursday, 21 October, 2021

Has Cryptocurrency Revolutionised Currency?


Asmin Ghimire

A currency in the most specific sense is money in any form used as a medium of exchange, especially banknotes and coins in circulation. A currency is a system of money in common use, especially for the people in a nation. We know that once there was commodity money then it was replaced by metallic money. Similarly, we can see metallic money being replaced by paper money and paper money by bank money or cheque.
Recently, in the few years, we are using the digital payment method and now in the current scenario, cryptocurrency is creating hype in international payment method. Some of the examples of cryptocurrency are bitcoin, Ethereum, Ripple, Litecoin etc.

Digital Currency
Cryptocurrency is a digital currency used as a medium of exchange. It is the digital currency stored in the secured computerized database and system. It does not exist in the physical form like the normal currency, which we use in our day-to-day life. Normally the currency that we are using is issued by the central authority but the cryptocurrency is decentralized.
When a cryptocurrency is created by a single issuer, it is generally considered centralised. But then the distribution of cryptocurrency is decentralized. The use of cryptocurrency is said to be a revolution in the coming future and this has been proved in recent time as it has hit $50,000 per bitcoin. It was Satoshi Nakamoto who has invented the bitcoin in 2009 A.D.
There has been much talk in the market about bitcoin in recent time. Bitcoin is the first decentralised cryptocurrency. It has the most market capitalization of about $114.9 billion(appr.). Recently many have heard about bitcoin reaching its new height. There are 18,665,587.5 bitcoins in existence. In recent time the tech giant Elon musk's company Tesla has brought the bitcoins of about 1.5 billion.
Recently Tesla company has also announced that it will accept bitcoin as its payment method. And about 50 companies in the world have officially agreed to accept bitcoin as a currency. Around 10% of the American people have cryptocurrency. But there is still a debate to accept bitcoin as the legal currency in the world. Some country like Russia, China etc. has banned the bitcoin in their country.
The main advantage of accepting cryptocurrency is its acceptance all over the world. At present, the currency of one country is not accepted in all the country. There is a problem with exchanging foreign currency and only a certain amount of currency can be news exchanged by one individual but in the case of cryptocurrency, it should not be exchanged with the central bank. The cryptocurrency is accepted worldwide and unlimited transaction can be made in a foreign country.
The main reason that the bitcoin is not accepted legally worldwide is that some country has felt that this might lead to the threat to their current currency. When all people start to use cryptocurrency then this might lead to a decrease in the value and importance of their current national currency. This will lead to a decrease in the value of their currency and this becomes a threat to the nation. And another main problem of having cryptocurrency is tax fraud as the coins are mapped to addresses and only the user knows what addresses they own from coins to user. The government should hack each individual to know whether to find out if he or she was being honest about his or her Bitcoin income. This is the main reason for not being able to accept cryptocurrency as the legal currency.

Black Market
Another reason can be the haven for the black market. The use of cryptocurrency is likely to be misused by the black market as a result the economic balance of the country can be damaged. When both buyers and the sellers are anonymous then any item can be sold and purchased without each party knowing from where it comes.
As a result, a seller of the illegal valuable item can sell their products to the customer without fear of the buyers being able to identify them to police. The trace of digital footprints cannot be found and criminal can escape easily from the eye of the law.
Even though cryptocurrency has some drawbacks but it is the next big transition in the evolution of the currency. Many of the big companies like Tesla, Microsoft etc. has officially agreed to accept cryptocurrency as currency. Cryptocurrency might not be the future of the currency but it is certainly the revolution in the field of currency.
The rapid development in the field of technology might change the currency of the country within the next few years. Each hour the world is changing and developing in every field and, surely, the field of currency will be changed too.
Many developments should be done to implement cryptocurrency as the legal currency. It is not sure that the cryptocurrency will be accepted worldwide but this is certainly the next step of developing a new currency system in the world.

(Ghimire studies at KUSOM)