The Background of Cryptocurrency
Cryptocurrency first became a well known phenomenon in 1983, through the American cryptographer David Chaum, who published a conference paper, creating an insight into the early forms of cryptographic electronic money. The idea concerned the concept of creating currency that could be sent as a anonymous transaction of electric money. This paper was deliberated and debated over by various researchers, one of these researchers being Szabo. Unfortunately, Szabo could not discover how to solve the infamous double spending problem. This is known to be how digital data can be copied and pasted, without using central authority. It consequently took a decade to set cryptocurrencies into motion, through the published white paper on "Bitcoin-A peer to peer Electronic cash system." Bitcoin began to rise steadily year after year, it started at $434 in the January of 2016 and grew to $998 in January 2017. A software upgrade was implemented to bitcoin and as a result increased towards an all time high of just under $20,000 in 2017.
The advantages of cryptocurrency on the future of finance
The most promising benefits of Cryptocurrency is that it allows for an inclusive financial system. This is because people will not need permission from any financial authority or Government to use the crypto ecosystem. Adding to this, the people that participate in this digital currency, will not necessarily need to have a bank account. This creates a great appeal for people to become their own bank, and only used their smartphone to keep track on all transactions. Cryptocurrency bring transactional freedom to our future, through it allowing for an exchange of value between two parties. Without the inconsistencies that Banks produce, as Banks can choose to cut off services to anyone for any reason. The digital currency is secure via the blockchain security, this high level of security. The security of Crypto is determined by the hash rate, the higher the hash rate the higher the computing power to compromise the network. The highest hash rate for a type of cryptocurrency is held by Bitcoin (Nibley, 2022.)
The disadvantages of cryptocurrency on the future of finance
Unfortunately using Cryptocurrency does come with its consequences, a main example of this that is currently circulating is that it creates the possibility to lose your virtual wallet or delete your currency. Also, thefts have become increasingly common from websites of which allow people to store their cryptocurrencies remotely. In addition, Cryptocurrency exchanges are vulnerable from being a target to cyber attacks. Consequently, people become a targe
t to irreparable loss of investments. The cryptocurrencies can loose value or even become worthless if companies or consumers make the decision to withdraw and or move to a new cryptocurrency. If you happen to run a business with cryptocurrency, you will have to consider that the Financial Conduct Authority (FCA) will not regulate the cryptocurrency market and therefore the business will not be protected in the same way as a business operating with the current banks. (NIBusiness, 2022.)
Is cryptocurrency beneficial for the future?
In conclusion, although Cryptocurrency has many advantages that make it a promising replacement to our current financial currency and transactions. It has various disadvantages that will create an alarming danger to the financial stability of our future. This will be mainly driven by the vulnerability it creates from the fraud and cyber attacks and likelihood of loss in investments with businesses withdrawing their investments from Cryptocurrency. As a result, Cryptocurrency will not be the future of finance as it is monitored and operating now. However if the necessary amendments are met based on the disadvantages mentioned, Cryptocurrencies future in finance would be considered propitious.