Since its introduction by the mysterious Satoshi Nakamoto, Bitcoin has changed the way that we look at money. Though it is still not accepted as a standard currency for the majority of transactions in the traditional sense Bitcoin and other cryptos as well as various blockchain technologies have probably had the biggest impact on the financial world in the 11 years since its inception.
In just the past year we have seen the proposition, forward and backward movement of Facebook’s Libra, and the People’s Bank of China’s announcement that they would soon launch a sovereign digital yuan called the Digital Currency Electronic Payment (DCEP). These two bold reveals, which bring the potential of a global digital currency ever closer, caused ripples across the global financial services sector. This is in addition to the various ways the financial industry is starting to ramp up the successful use of blockchain technologies. Financial Services are expected to spend $11.7 billion on distributed ledger technology in 2022 with Japan and Canada seeing the fastest growth.
So why has the financial world embraced this while the rest of the world remains either completely skeptical or at least very cautious? The first to really see the benefit and take advantage of a safe, secure, and anonymous distributed payment system were unfortunately those on the dark web, most well-known, the members of the notorious Silk Road. This early linkage has defiantly done damage to the reputation of the currency and all other cryptos that have followed it, yet its underlying benefits and weaknesses are still there.
The three attributes that all cryptos have
The three kinds of Cryptos
Going forward cryptos will certainly have a place in the finance world. It is hard to say what this role will exactly be. Will a Chinese or American digital currency become the standard currency for international trade? Will fiat currencies start to fade because of their inherent problem of inflation? Will people start to consider the intrinsic value of cryptos worthy of consideration? Only time will tell.
Disclaimer: The author of this text, Robin Trehan, has an undergraduate degree in Economics, Masters in international business and finance, and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries, and/or employees.
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