Currency is a symbol of wealth or possession or an object of a defined written value in exchange of which you can get any kind of goods and services. The invention of currency could be dated back to the start of human civilization. Since then, currency has undergone many evolutions till date. These evolutions have changed the form of currency to a vast extent. We are observing the beginning of new evolution in currency in the form of Digital Currency or Cryptocurrency.
What is Cryptocurrency?
Cryptocurrency is made of two words “crypto” and “currency”. So, according to the words it could be defined as crypto graphed currency. Technically, it is the digital or virtual currency which is created, managed, exchanged and protected through the use of advanced encryption techniques called cryptography.
In more simple terms, the method of storing and transmitting information by transforming it into an unreadable or encrypted message in known as cryptography. And the application of cryptography on the currency makes it as “Cryptocurrency”. Such encrypted messages can be deciphered only by the person who possesses the secret key to it.
Cause of Evolution:
We are observing a great increase in the use of internet. Internet has become a platform for all our day to day things and dealings. Not a single person or sector has been spared with this effect. Seeing this scenario Electronic Security has become a major concern. “Cryptography Systems” are an answer to all security threats. The systems vary from industry to industry.
Today, even the currency has been brought on internet through digital payments and so, even this needs a platform for secured transaction. These Security threats are one of the causes for invention of Cryptocurrency.
Benefits of Cryptocurrency:
- Anonymity of transactions. Unlike the credit cards which work on “pull” mechanism, this works on “push” mechanism. In push mechanism the holder has to decide how much amount and to whom it has to be sent without revealing his identity.
- Organic Nature: As it is not issued by any central authority. Making it immune from government interference.
- It includes everyone in the financial system, not only those who have access to modern day banking.
- Fees for International Transaction is either very low or there are no fees at all.
- As Cryptocurrency has a digital nature, it cannot be counterfeited or reversed by the sender.
- Most important of all is you are the only owner of it. Unlike the other electronic cash system PayPal your account is not owned by someone else.
- Mega Coin
Drawbacks of Cryptocurrency:
- As this is a decentralized currency there is no central authority to ensure the smooth running of it. And to back the value of it.
- Anonymity feature may lead to increase in illegal activities like money laundering, smuggling, weapons procurement etc. This may result in more stringent regulation by government that may lower the currency’s value.
- In cryptocurrency everything is digital and there are no central records or hard copies of it, so this puts it at a risk of total loss if the system crashes. Secondly, it is not completely immune to the threat of hacking.
- These would need applications for low-cost international transactions like the present electronic payment systems have.
- The rate at which cryptocurrency can be exchanged for another currency can fluctuate widely.
To see a future picture of anything we should consider the pros and cons together. Seeing that for cryptocurrency, it seems difficult to predict a defined future for cryptocurrency. Any new evolution goes through many phases before the ripe fruit is born, so will the cryptocurrency. Some of the limitations of it could be overcome through technological advancement. But whether it would survive through the evolution phases and rule out the note currency completely or not that is difficult to say.
With the increasing cyber threats in the digital payments cryptography technique could be seen as the saviour and this only would become the reason for the growth and success of the cryptocurrencies in future.
Some changes that we think, could be seen in it to make it as future currency are as follows:
- UNO could come up with a committee for Regulation of the Currency value and its smooth running.
- Some changes in terms of anonymity of transactions. There could be a change which would make the details of transactions accessible only to some elected higher authorities at international level.
- The different cryptocurrencies could launch their apps like the banks for the transactions.
- Cloud computing could be imbibed in it for the data repository.
We predict bitcoins, litecoin, ripple, mintchip etc. as the first waves of the next evolution in the currency. And may be in some future the currency would have this new face of virtual or digital currency. These could be the globally accepted currency not under the control of the Governments of the country. It may happen that all the day to day dealings would be happening through the digital cash. There won’t be any division of currency denominations as per the country. Every day we would see the value relation between different digital currency.
If we think on these predictions of future, then there would be a standardization in the currency all over the world.
Let’s see how future of cryptocurrency is shaped. Either there would be a solution for its drawbacks, so that we enjoy the unbeaten benefits of it. Or, this evolution will not be able to strengthen its roots.