Is Cryptocurrency the Solution to the World Financial Reset? – An Insight

The great Coronavirus economic crash has left people with an intense feeling of ambiguity, mistrust, and instability. No businessman or economist was prepared to bear the intensity of this crisis that has shuddered the very foundation of business plans, investment portfolios, and start-ups to their core. Even the most experienced investors couldn’t see this hurricane coming until it knocked at their doors with a bang. The enormity of the financial crunch has reached a new level in the past three months. People in business are trapped in a cage surrounded by losses at every exit gate. Bouncing right back to the old ways is not a possibility. Businessmen and investors need to work on building a ‘new normal’ by diversifying their ways of proceeding with the pandemic.

Business expenditure has to be directed towards the abandonment of traditional ways for an interim period and exploring digital means of functioning without further disruption. With the world at its knees, it is a substantial opportunity to build a digital world for ourselves which is both prudent and sustainable.

A promised way of moving towards a new normal is embracing institutional money and digital payments. With physical distancing becoming a global compulsion, digitizing monetary payments is the only way to move forward. As the need for digitization has risen considerably in recent times, the pandemic has caused people to hedge their investments by buying into cryptocurrencies. After the Supreme Court decided to lift the ban on the flow of cryptocurrencies, India has been an active participant on the radar of the global crypto map. As the nation slowly recovers from the economic crisis, investment in digital currencies is reaching new heights. The verdict has opened the gate for new collaborations and ventures for multi-national investors like WazirX and ZPX to hop right back in the game.

Crypto as an investment sector is growing considerably as the world is being reformed into a global village. Before the virus outbreak, cross-border transactions took place via traditional methods like cash payments or bank transfers. But now, owing to the urgency to stay at home, traders are shifting to digitized payment methods like Bitcoin, Ripple, Ether, etc. Back in 2017, withdrawing cash from crypto investments was a hindrance, but today, users can sell their crypto investments and liquefy it into cash simultaneously. It is a major example of how digital currencies have been reformed to make it easily accessible to potential investors.

A considerable reason for the rise of crypto in recent years is its decentralized property and credibility of its blockchain. The fluctuations in its value solely depend on the free forces of the market (demand and supply) and the investor’s willingness to invest. The administration or the central authority has no role to play in manipulating how the currency flows. Henceforth, posing no restriction on currency issuance and promising autonomous control over the transactions to the stakeholder. This comes across as the biggest flipside of the currency as it is both a flaw and a virtue. The democratic forces governing its flow make it highly speculative, i.e. the price change is as uncertain as a toss of a coin. Every time the value falls drastically, loss waits for the investor at the doorway. For Example, on 11th April 2013, within 6 hours, the value of Bitcoin plunged from $260 to $130 crashing the stakes.

The currency’s credibility is impenetrable. It is unfeasible to forge complex algorithms of the blockchain which safeguard the anonymity of the transactions. Cryptocurrency is steadily entering into the world of real-time payments owing to the speed of the transactions without delays. Ripple has come out to be the third most widely used Cryptocurrency across the globe. The protocol used in the project connects ledgers from 2 banks directly, leaving no space for intermediary failures. The current exchange rate of the company is $0.34 per XRP. While Bitcoin is a widely used store of value like gold, XRP is the fastest crypto which completes 1500 TPS (transactions per second). Let’s imagine what would happen if the spontaneity of XRP is combined with the stability of Bitcoin. The conglomerate would turn out to be one of the most beneficial developments in the field of digital payments.

The future of collaboration between cryptocurrency, jurisdictional administration, and online payment wallets:

The disclosure of national digital payment wallets like Bhim UPI, Paytm, Google Pay, PayPal has been on a considerable rise since the last 2 years. The transactions through Paytm and UPI take place in the form of Indian Rupee in blockchain ledgers similar to that of Bitcoin. But as these wallets are easier to access with no/minimal risk factors, they have an edge over cryptocurrencies. Moreover, national digital payment methods come out as a more reliable medium for the laymen. In these difficult times, effective cooperation is the need of the hour. Confrontations have never fabricated results. Instead of challenging the growth of digital payment methods, we need to think of a way in which digital currencies like crypto can work in unison with online payment options to ensure a better user interface. The collaboration will have established a promised system through which the services are easily accessible and delivered.

Over the years, the involvement of the state authority in crypto’s whereabouts has always been a global topic for debate. While some critiques say that complete decentralization with minimum susceptibility to authoritative control is the only way to ensure the currency’s future, others argue that standardized regulations on the flow of currency are of utmost importance. Looking at the current scenario, crypto investors must work in line with the government. If not regulated, the wide use of crypto might turn into a time bomb. The alliance between the two will make crypto a trustworthy platform for investment as at the end of the day, the trust of the people lies with their government.

The alignment between the two will ensure a safer environment for investors, increase awareness about the benefits of digitizing payments, attract potential investors, reduce conflict between both parties, remove the threat of alternate currencies, and no entity will question the credibility of crypto as it will be accountable to the legislation. Additionally, the outrage of criminal offenses in cybercrime will decrease and fluctuations won’t be as drastic or uncertain as before, reducing the risks of unbearable crashes and losses.

Role of FATF:

A significant factor that might hinder the flow of the currency in the future is the rise of illegal activities like money laundering, smuggling, and weapon procurement. The vicious paradox poses a threat to the very core facet of the structural basis of the currency’s existence. To combat the rise of cyber terrorism through cryptocurrency, FATF (Financial Action Task Force) has released guidelines regulating the misuse of the currency by urging stringent identification and verification of the users. This has ensured that the legitimate benefits of crypto do not get overshadowed by illegal activities.

Conclusion

Despite the recommendations and developments, there’s still a long way to go in making these digital payments permanent. People are reluctant to invest in alternate currencies owing to the risks associated with it and conformity with old techniques. We are so embedded in the traditional ways that we fail to look beyond. Our information is only subject to what we know, and not what we could know. The stigma attached to letting technology lead us is still getting the best of us. The only course of action to have a promised future is by reshaping our beliefs and striving towards betterment. The future is digital, and cryptocurrency advances as a savior for those who believe in the future and beyond.