Why Are Cryptocurrencies Emerging As A Problem Solver In The Financial Sector?
Digital currencies have emerged as a digital alternative to more traditional methods of exchange like credit cards or cash, cryptocurrencies or cryptography have also created alternative points of view. On the other hand, there are a bunch of people and institutes that see cryptocurrencies as a financial medium for terrorists, criminals, and fraudsters.
Obviously, cryptocurrencies have several major issues that must be addressed properly before adopting them at a mass level. The lack of stability in cryptocurrency value is one of the most critical issues which serves as a barrier to the mass adoption of cryptocurrencies in business transactions. The decentralized framework is beneficial in many ways, but most financial institutions and regulations are extremely concerned about it.
Recently, the crypto market crash was all over the news as not only bitcoin but also other major digital currencies experienced a drastic fall in their values. This is a good indicator for newly emerged cryptocurrencies that could avail opportunities to attract the attention of investors. Platforms like yuan-pay-group.org offer more than 200 cryptocurrencies to make a profit from newly emerged cryptocurrencies.
In general, Cryptocurrencies hold the potential to dominate the traditional currencies in the future if the problems associated with them are managed properly. Read this article to know how cryptocurrencies could become a workable alternative to more established forms of financial trade.
Table of Contents
Transactions
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The problem with traditional business dealings is that the agents, brokers, and legal representatives can add significant expenses and complications to what should otherwise be a simple and straightforward transaction. There are brokerage fees, commissions, paperwork, and other special conditions that may apply.
One of the benefits of digital currency transactions is that they are only one-to-one affairs, there is no middleman or regulatory body involved. The transactions take place on a peer-to-peer networking structure that makes the “elimination of middleman” a standard practice.
More confidential transactions
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When you consider cash and credit systems, your entire transaction history is open to banks or credit agencies involved, each time to make a transaction. At the simplest level, this could involve a check on your account balances to ensure that enough funds are available. Where more complex or business-critical transactions are involved, a more thorough examination of your financial history might be required.
While dealing in cryptocurrencies, each transaction you make is considered a unique exchange between two parties, the terms of which may be agreed upon and negotiated in each case. This mechanism guards the privacy of your financial history and provides protection from the threat of identity or account theft which has become quite common under the traditional system.
Transaction fees
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While checking your monthly account statements from the Credit Card Company or banks, there is no doubt that you balked at the level of fees imposed for transferring funds, writing checks. If you are performing a lot of transactions in a month, transaction fees can take a significant portion of your assets.
Whereas, transaction fees involved in dealing with digital currencies are not a matter of concern. There are only some external involved if you engage the services of a third-party management service in order to maintain your cryptocurrency wallet. Still, the transaction charges incurred by traditional financial systems are much higher than the charges incurred while using cryptocurrencies.
Greater access to credit
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The internet and digital data transfer are the media facilitating the exchange in digital currencies. So these services are easily available to anyone with a viable data connection, some knowledge of digital currency networks on offer, and ready access to their relevant websites and portals.
There are almost more than 2 billion individuals across the world who have access to mobile phones or the internet but are unable to get access to traditional systems of banking or exchange. The ecosystem that cryptocurrency holds the potential to make transaction processing and data transfer available to a huge number of willing consumers.
Economic collapses
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When a country faces an economic collapse- either due to corrupt governance or any other reason, it takes years for that country to rebuild itself. In such critical conditions, a country’s residents lose their trust in government-backed traditional currencies.
In countries where people lose their life savings or experience other extreme hardships due to past financial issues, it becomes more difficult for nations to rebuild a strong level of confidence in native currencies. That’s almost exactly the case with Zimbabwe, where people advocate for introducing a cryptocurrency.
Alternatively, some nations struggle when the Government of the United States imposes sanctions that impact the ability to trade with other nations in a negative way. Hence few globally established nations like China are in the process of investigating cryptocurrencies as a way to fight back against the United States’ extraordinary economic domination.
Cryptocurrencies are considered a problem solver in stimulating the nation’s economy and help them recover persistently after prolonged slumps. The fact is that there is not a single cause for the failure of a Nation’s economy, but cryptocurrencies could provide a possible range of assistance that could help nations to recover.
Pension Funds solution
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Pension plans are supposed to facilitate people with the resources they need to enjoy comfortable retirement after they leave the workplace. Unfortunately, traditional pension programs have several problems. They are not secure enough, underfunded, and fail to deliver adequate security.
As traditional Pension plans are not dependable enough, people look forward to preparing for their retirement years through unconventional methods. One way is to invest in cryptocurrency as a part of an individual retirement plan (IRA). Bitcoin IRA introduced a first-ever self-directed cryptocurrency IRA.
Conclusion
Besides the benefits derived from the use of digital currencies, there are still many areas where the use of cryptocurrencies creates a serious problem. Until the challenges involved are not solved properly, crypto mass adoption in the financial sector is hardly possible. In upcoming years, the possibility is high that businesses and individuals would favor cryptocurrencies over traditional systems.
