How the Cryptocurrency Era is Radically Shaping the US Financial Sector
Cryptocurrencies have become a booming industry, with financial experts estimating the industry to be worth nearly $200 billion. With significant business captains of industry such as Elon Musk participating and endorsing this new form of currency, it is a technological innovation that will considerably redefine how the financial sector looks like in 2021 and the future.
The phenomenal rise in cryptocurrency popularity in the last few years has proved that technological change is-indeed-inevitable. In the United States alone, over 2,000 businesses are now accepting Bitcoin as payment from consumers. This new acceptance is a significant shift from the standard cash-in-hand transactions that most people have used fir decades.
Further, financial markets worldwide have now provided traders with the opportunity to trade in Bitcoin- the trend has been steadily rising in the last couple of months. Blockchain technology has not only presented opportunities for ordinary traders but also to big business moguls. Recently, Tesla made the news headlines when its CEO, Elon musk, purchased $1.5 billion worth of bitcoin. This move rallied bitcoin on an upwards trajectory even further. The trend shows how much potential power bitcoin actually possesses.
What's more, in the future, bitcoin is projected to be on track as the world's most valuable currency. Well, in time bitcoin may become even more valuable than the Euro or the sterling pound. Bitcoin's rising value is the reason many countries are now advocating for cryptocurrency use. Of course, the year 2020 was stressful, especially to financial markets- even though bitcoin also felt the effect, it has been able to rise steadily. In the future, we will begin to see more banking and lending institutions accepting cryptocurrencies as their preferred payment method.
Also, in the future, we might see the expansion and growth of economies, and this will be due to cryptocurrency activities. The mining of bitcoin will provide business opportunities for many people worldwide, especially in developing countries. Russia is now accounts for 6.9% of the world's total cryptocurrency mining capacity- showing how lucrative this activity is. More economies worldwide are likely to follow suit in setting up infrastructures around cryptocurrencies. This will, undoubtedly boost their economies.
The banking industry has often demonstrated a lack of transparency in many ways. The onset of cryptocurrencies has- clearly- changed this dynamic and will continue to do so in the future. Transactions in the crypto world are transparent, as it enables customers to get an inside look at what goes on throughout the stages of a transaction. Privacy will also be enhanced in the future as crypto transactions involve high levels of encryption, guaranteeing users' privacy.
Access to funds in the financial world has mostly been restricted to big players in the industry, especially when it comes to substantial lump sums of money. Currently, most customers often jump through hoops to access cash from banking institutions. Cryptocurrencies will change this-more individuals will be able to access money regardless of their power ranking. E-wallets will also continue to become popular as more people realize the importance of owning the new currencies.
Also, financial market players in the future must be keener while trading cryptocurrencies. Over the past few months, many have witnessed how volatile Bitcoin has become, and many stakeholders in the industry expressed concerns. In the future, traders will have to be more careful while trading these currencies. More competent trading practices must be developed to counter the volatilities of cryptocurrencies. This became evident when Elon Musk stirred the market by making unusual crypto purchases.
Ultimately, financial policy formulation will take a different approach because of these currencies. Banks and monetary institutions will lose control of the money supply if these currencies are issued in a decentralized manner. Policies to regulate such currencies will be crucial, as they will determine how the coins are held. Bitcoin, for instance is likely to make governments categorize mining activities to deduce the best way to deploy taxation measures.
Finally, many have heard of businesses using cryptocurrencies to raise money from investors. This capital mobilization is called an Initial Coin Offering(ICO). In the future, there's likely to be more of this. In the end, businesses must shift more towards using cryptocurrencies to mobilize funds, create a need for better regulation and prevent illegal activities. Think of it: Through its financial market supervisory authority, Switzerland recently released regulatory measures for ICOs, and more nations are likely to follow suit in the future; this is quite interesting.