Digital Currency Bitcoin

What Is Digital Currency And Will It Become The Norm?

Imagine being able to electronically transfer currency without the need of a financial institution. This is becoming a reality for individuals and businesses globally. The future of new money is here.

By 2030, the digital currency industry is projected to reach US$4.94 billion, growing at a compound annual growth rate of 12.8% from 2021-2030.

It wasn’t until Bitcoin, the largest market cap cryptocurrency was released in 2009 that cryptocurrency blew up and we saw the beginning of modern cryptocurrency. Bitcoin has opened the doors to an exponential growth in coin varieties.

So how does it work?

A unit of cryptocurrency exists as an entry in an online ledger known as a blockchain, which records every transaction ever made in a cryptocurrency. Each cryptocurrency has their own blockchain, which is updated by volunteers who keep track of every bitcoin transaction. For every “block” added to the blockchain (think of a block as a page full of accurate transactions), the volunteers are awarded 12.5 bitcoins that are created spontaneously (mined), hence adding more crypto coins into the crypto market.

There are a finite number of coins available so making fraudulent coins is not possible. The number of coins expected to be mined for bitcoin for example is 21 million which should be reached by the Year 2140 if current mining practices continue.

Cryptocurrency is mostly used for payment by people who believe in the cause, which is not the majority of cryptocurrency owners. Most cryptocurrency owners have cryptocurrency as an investment waiting for the price of their cryptocoin to inflate so they can sell for profit, much like stocks.

Will cryptocurrency become the new norm?

According to the cryptocurrency payment app “2gether” based in Spain, “the everyday crypto user is a highly educated millennial male.” The majority of users are between 26-45 years old and work in white collar professions.

A survey by Polish crypto app BitBay Pay also shows a >90% market share of male cryptocurrencies owners. Only 25% of people who owned bitcoin have used it for a financial transaction, however 90% considered a digital transaction with cryptocurrency safe.

Cryptocurrency isn’t typically used to pay for necessities, like housing or bills, and is more commonly used to pay for food and at restaurants.

Some countries are more open to Crypto than others

People living in countries experiencing hyperinflation in their national currency are using cryptocurrency more frequently where it’s seen as a hedge against political and economic instability in countries such as Turkey, Venezuela and Argentina.

Currently El Salvador is the only country in the world to accept bitcoin as legal tender. Other countries are trying to create regulations to minimise or even make bitcoin as tender illegal due to its unregulated design. The Financial Action Task Force (FATF, an international body created by the G7) has defined cryptocurrency related services as “virtual asset service providers” and recommended that they be regulated with the same money laundering and know your customer requirements as financial institutions.

It is hard to say where cryptocurrency will be in the near future, but with Commonwealth Bank announcing last week that Crypto will be accepted – the reality of increased day to day use is drawing near. While cryptocurrencies are being accepted as payment in a growing number of fields, they are not readily available in day to day living but this is all changing.

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