With digital technology, where colonies are getting closer to a higher success rate, there has been the development of e-cash as well. It serves businesses and individuals to go with the most secure and decentralized finance in the form of cryptocurrency. It came in 2009 with the creation of Bitcoin. There have been various other innovations in cryptocurrency. It offers a peer-to-peer transaction system that is secure from any interruption from the side of a third party. Nowadays, several other currencies have appeared, including Litecoin. IOTA, Tipple, and Ethereum. As per the growing rate of cryptocurrency usage, it is clear that it will have a significant impact on finance in the coming future.
Cryptocurrency Vs. Regular Currency
Cryptocurrency is different from regular currency in various positive areas as it does not involve any third party. There are no government authorities or financial banking services for cryptocurrency transactions and maintenance. It offers individuals and its users the freedom to have more secure financial services that are decentralized and free from third parties. On the other hand, regular currencies such as U.S. dollars, British pound, or Pkr are under the control of the government in so many ways. Well-established bank services are responsible for conducting such transactions. These banks and other platforms work along with legal requirements and involve government bodies.
Cryptocurrency and its Role in the Economy
Cryptocurrency has a different value in the economy, which is different from fiat or regular currency. It solely depends on the regular currency people invest in crypto and the ratio of users in terms of population. There are various factors that affect cryptocurrency in terms of its growth and success. These factors involve capitalization, media coverage, and the technology behind the currency. Cryptocurrency offers users investment and trade. A big factor that goes into the value of a cryptocurrency is the ease of investing in a particular one. The most popular exchanges are Coinbase and GDAX, which allow trading right from a mobile phone. When a currency gets added to Coinbase, it is likely to go up because of the influx of new money that will go into the currency.
An argument by long-term cryptocurrency holders is that trading for fiat currencies defeats the major goal in general. Consumers treat cryptocurrencies as stocks to simply exchange for fiat currency, so their endurance can face a significant decline. Despite the trading, there are several day-to-day applications of cryptocurrency. There are many merchants who accept cryptocurrency in exchange for goods and services. Cryptocurrency payments can be risky if their value goes down.
Cryptocurrency and Legal Authorities
As cryptocurrencies garner more attention in the public eye, regulating bodies, governments, and individuals looking to make money online are taking notice. While the currencies are decentralized, governments are still seeking ways to administer guidelines to the crypto space. The IRS is an example of an entity that is active in seeking such regulation. Per a 2014 news release by the IRS, “General tax principles that apply to property transactions apply to transactions using virtual currency.”
This means that profits made utilizing cryptocurrencies are subject to taxes, just like with fiat currency. In addition to taxes, exchanges such as Coinbase and GDAX have daily bank withdrawal limits, which start at $10,000 but can be increased with appropriate verification. Without such regulations, wealth distribution may be changed throughout the world, seeing as individuals are millionaires or even billionaires in cryptocurrency.
Final Words
Cryptocurrency is free from the interruption of third parties and involves peer-to-peer transactions for enhanced security of the financial system. People are truly interested in using crypto for investments and trade. Nowadays, many dealers have started using crypto in exchange for goods and transport. After the first invention of Bitcoin in 2009, there have been significant alterations and innovations in crypto currency in the form of various other coins. Hence, crypto keeps on growing with the ever-changing usage and habits of individuals, groups, and entities. It is free from government and any banking sectors but contributes to the economic growth of any country. It significantly impacts the economy as people use real or fiat currency to invest in cryptocurrency, which results in economic growth or loss.