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Blockchain might provide several facilities, but it might not be the future of digital cash
Within a span of a few years, cryptocurrencies have grown from an unfamiliar concept in the digital world to a billion-dollar industry, with cutting-edge emerging technologies that have the potential to disrupt the global financial system. Bitcoin and hundreds of other cryptocurrencies are increasingly becoming top investment assets, and are being used to buy everything, starting from software to real estate to drugs. Currently, our generation is standing at the edge of a new form of finance to take over all traditional forms of finances. Gone are the days when we had to wait for hours to take out cash from ATM machines, and wait for days and pay hefty fees to conduct cross-border transactions. The advent of blockchain and digital currency has made these tasks quite easier. Over the past two years, several individuals have joined the crypto market to conduct seamless online transactions. But experts say that there is more than this to the future of money. Even though blockchain has revolutionized traditional finances and given us digital currency, experts are quite sure that the future of money will not comprise blockchain technology.
For some, cryptocurrencies are democratizing in nature. Centralized institutions are mostly afraid of cryptocurrencies and blockchain technology because it is away from the power of creating money from them. However, since the technology is highly unregulated, it has not achieved full support from investors. In fact, crypto mining being one of the most harmful aspects of cryptocurrency is still a cause of deterrence for several investors. But with governments embracing digital currencies and blockchain technology for various enterprise purposes, financial regulators are scrambling to respond as to how they speculate handling this task.
Is Blockchain the Future?
Blockchain technology has several perks. It has the potential to provide a much after and cheaper alternative to traditional cross-border payments methods. While typical money remittance costs might be as high as 20% of the transfer amount, blockchain may allow for costs within just a fraction of that amount. The technology enhances guaranteed, secure transactions along with superfast transaction processing speeds. But there are hurdles that even blockchain needs to cross.
Since paper money is quite different than digital cash, experts do not accept digital money as original ‘cash’. Besides, the emergence of a new form of crypto, known as the Directed Acyclic Graph (DAG), which is the organizational model for the structure of its decentralized ledger, is allowing old problems to be solved and new features to be added.
Experts say otherwise
As mentioned earlier, despite the emergence of various digital currency payments apps, experts do not consider digital currencies to be the actual ‘cash’, and this is not due to some theoretical distinction. For the past several months, the dominance of paper money is declining, due to various reasons. And this phenomenon is irking policymakers. So, to encourage conducting monitored transactions, governments will eventually develop more CBDCs, as a means of payment. And probably, the blockchain technology will be taken over by some other centralized technology providing the same facilities. But the real question here is, if anonymity is the key to blockchain and cryptocurrencies, how will CBDCs be successful in the long run, is this the governments’ way to encourage using paper money? Only time will tell.