August 23, 2019

The Future Of Currencies

Have you ever imagined arcade tokens or casino chips as a mode of payment for trading? Seems to be a child’s play but this is what people are now using to make transactions! In fact, this seems to be a more secure thing than banks.
Bitcoin, Ripple, Litecoin are the types virtual or digital money which takes the form of coin or token. These are what we call ‘cryptocurrencies’. Like any currency, cryptocurrencies can be used to buy goods and services. But unlike other currencies, cryptocurrencies are digital and it uses cryptography to provide secure online transactions.

The Future of Currencies

What is cryptocurrency?

The word ‘crypto’ in cryptocurrencies refers to complicated cryptography which allows a particular digital token to be generated, stored, and transacted securely and anonymously. Cryptocurrencies work using a technology called Blockchain. Blockchain is a decentralized technology spread across many computers that manages and records transactions.

According to a market research, more than 2200 different cryptocurrencies are traded publicly. Among all, Bitcoin of course is the most valued cryptocurrency in global economy. But if combine the net worth of Bitcoin with that of Litecoin, Monero , Ethereum and all other cryptocurrencies, it comes out close to $100 billion!

Many of you might be interested in buying cryptocurrency. So how do we buy it? It is as easy as buying clothes on amazon. The easiest way is to buy cryptocurrency is with a debit card on a centralized exchange. For example, Coinbase is a popular interface to buy crypto with Fiat i.e. dollars or euro. By creating an account and verifying identity. After that, user can buy it with their debit card.

As the means of transaction of money is changing, start-ups have also been changing accordingly. There are start-ups that only specialized in providing solutions for smart contracts, supply chain, finance, etc. The product helps suppliers avail loan against approved invoices by the manufacturer with no paperwork needed. Some of these are Elemential Labs, Sofocle Technologies and Catenia Technology. These start-ups have there since around a decade! Yes, cryptocurrencies like Bitcoin have been there since been long, these just rose to popularity in the recent times due to the sudden boom in the prices in the mid of 2018!

The fact that these currencies remove central banks from managing the money supply and uses Blockchain makes it more secure and popular than traditional payment system. Also, there are many good reasons to invest in cryptocurrency but governments are unlikely to give away their currency to a digital competitor. The Reserve Bank of India, has a group studying whether digital currencies backed by global central banks can be used as legal tender. However currently, the use of cryptocurrencies is a violation of foreign-exchange rules. The RBI on 6th July, 2018 made it illegal for any bank or any regulated financial institutions from ‘dealing with or settling virtual currencies'. The future of cryptocurrencies thus remains largely undefined.

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