A new smartphone application that makes cryptocurrency payments is becoming increasingly popular. It’s called MobileCoin and has already been downloaded 100 million times. It can ship an end-to-end encrypted cost in just 5 seconds. And with the peer-to-peer nature of cryptocurrency payments, it has already caused regulatory headaches and potential economic harm. But is the future of cryptocurrency payments as bright as it seems? Here are some things to consider as cryptocurrency adoption continues to grow.
Peer-to-peer nature of cryptocurrency payments
There’s no central controlling authority in the Bitcoin network, and therefore no central government can dictate the rules for cryptocurrency payments. Because the network is decentralized, it’s completely transparent and can function even if the system is offline. Furthermore, it’s a decentralized network, with no master server to regulate. All transactions are processed between two or more software customers using hundreds of distributed servers. This makes it difficult for governments to control the flow of money and prevent people from doing business with each other.
The ease of transferring money and low transaction costs are some of the primary benefits of using cryptocurrencies. Unlike traditional banking methods, they don’t involve any bank fees, which means that cryptocurrency payments can be made without much hassle. Moreover, many countries have adopted Bitcoin as their official currency. And the countries that aim to eliminate cash have also been more accepting of cryptocurrency payments. And these are only some of the reasons why cryptocurrency payments have gone worldwide.
A significant advantage of cryptocurrencies is their decentralized nature. Using a blockchain, they can be sent and received securely and anonymously without a third party. Furthermore, they beat traditional bank transfers by up to 90%. Even regulators are evaluating the unique challenges presented by digital currencies. In a recent paper by the Global Future Council on Cryptocurrencies, it was reported that nearly 90 percent of the members of the European Payments Council are confident that blockchain technology will fundamentally change the payments industry by 2025. Traditional banking and payments systems are causing trillions of dollars to leak around the globe because of added fees and inefficiencies.
Potential for regulatory headaches
Regulators are starting to focus on the cryptocurrency space, and some states and federal agencies are working to establish the groundwork for a massive regulatory task. The challenge of regulating cryptos, particularly as their popularity grows, is defining them, determining their place within existing frameworks, and determining the jurisdictions that will address any central challenges. There is a great deal of overlap between financial services regulatory frameworks in the U.S. and across other countries.
Regulators should be aware of the cross-border spillovers that can occur, such as illicit use. However, most consumers do not directly own cryptocurrencies themselves, and instead use crypto-wallets or other intermediaries to make purchases. If cryptocurrencies are used by consumers, relevant regulatory rules already apply to those firms providing crypto-infrastructure, and existing rules can be adapted to address specific issues. For example, consumer protection laws and AML/CFT rules may be applicable.
Economic impact of cryptocurrency adoption
Accepting cryptocurrency payments may be a good idea for small businesses. This currency is a universal global currency that anyone can use, enabling small businesses to serve a wider customer base. Additionally, accepting crypto may signal that a company has progressed in the field, as it is a new commodity that people can use to pay for goods and services. But how does it help businesses? Below we explore some of the ways it can help.
The crypto ecosystem has benefited countries and posed threats to financial stability. While these threats appear contained for now, the global economic impact of cryptocurrencies and stablecoins remains uncertain. For instance, some emerging markets may become impacted more than developed economies if a widely-accepted stablecoin goes bad. Nonetheless, there are still several ways to make this trend work for these countries. To ensure that this doesn’t happen, policymakers must adopt global standards for cryptocurrencies and strengthen monitoring of the ecosystem.
Indian investors are interested in crypto-currencies. They can earn a viable return while reducing the cost of a product. Further, the industry in India has already proved its benefits at the grassroots level. As the country’s economy continues to grow, it will become more attractive to CryptoTech companies. Furthermore, the Cryptotech industry in India has the potential to strengthen key priority areas in the economy. The country is home to the fastest-growing technology sub-sector.