Will currencies be accepted as daily payments in future?

The world is evolving; new opportunities have risen to the horizon with the pandemic and its induced restrictions. One of those is associated with digital assets. Following the footprint of major economies, numerous states have taken suit in the MENA region as well.

If you are involved in the crypto market, then you would know the value, Local crypto exchange in GCC hold. These are responsible for securing the transactions and are regulated by the government in some cases too. The question, however, is will cryptocurrency be the future norm of payments? To answer that query,  here we compare and analyse the future predictions associated with crypto.

Cryptocurrency

Cryptocurrency, defined as a digital asset that allows exchange, is based on cryptography technology. The currency is said to have been involved in securing tractions online with a market capacity that is huge in nature. Cryptocurrency and the leap to becoming real in 2009 with the release of its first and most eminent form, Bitcoin.

In the year 2013, the currency soared to a record high of $266 per bitcoin and reached its peak of $2 billion after that. In 2021, the value exceeded 65,000 USD credited to Tesla and Coinbase. With Tesla’s announcement of acquiring 1.5 billion US dollars worth of bitcoin, the digital coin was bound to fuel the masses. However, the fluctuations in the pricing and downtime persist. This leads to our question, will crypto be the new normal?

Central Bank Digital Currency (CBDC)

Keeping in mind the fire that has set ablaze the market, the Central Bank came up with the notion of its own digital money. The CBDC is still in its very primal stages. Still, at its core, unlike being decentralised, the CBDC is backed by a central bank and represents money that has a direct liability to the central bank.

China, Japan, Sweden and Nigeria, and the Bank of England and European Central Bank are some of the CBDCs working towards the trial. Currently, Bahama is the only one that has rolled out its first CDBC, known as the sand dollar. The US federal reserves are still contemplating the possibility of this opportunity.

Stable Coins

Since we all know that cryptocurrencies are volatile in nature, the developers formulated another option. A more viable and attractive one is the Stable coin. These are pegged to reserve assets like Gold or US Dollar but are not issued by the Central Bank. The purpose of doing so is to reduce the fluctuation associated with cryptocurrency. The business case of stable coins is that they provide low-cost and easy access to digital payments across national borders.

The US government has been focused on regulating stable coins since then; their potential of being fast, efficient and inclusive of payment would increase by several bounds. The largest stable coin in the market currently is Tether. So far, its viability has not been brought into question, and its popularity Is increasing.

Opportunity of Crypto

The upside to crypto being our new normal is that it brings many opportunities to the surface. One of its main qualities is that it allows for open participation. This would imply that anyone interested in connecting to cryptocurrency is free to do so. This is possible for cryptocurrency users because blockchain technology is based on verification in its entirety.

Compared to modern financial institutions, this possibility does not exist because of regulations and industry structure. Another bonus point associated with cryptocurrency is that it does not have a limitation of time. In order to make transactions across borders and for bank-to-bank transfers to happen, the transaction system acquires 1-5 business days with a transaction fee. Blockchain technology, on the other hand, offers a meagre transaction fee as compared to that of banks for some coins and also does not reveal the sender’s personal information.

The Future outlook

According to some economic analysts, crypto is forthcoming to be a significant institutional structure in the market. The possibility that it will soon be floated on Nasdaq adds to the credibility of blockchain, along with it being an alternative to the conventional currency being a real possibility. On the other hand, some economists feel that all crypto really needs is a verified exchange-traded fund (ETF). An ETF will make investments easier, thereby creating a lucrative possibility for crypto being the new normal.