For the past few years, Cryptocurrency has been the talk of the town. Everything is digital now so why not the currency?
Cryptocurrency is actually a type of digital asset designed to work as a medium of exchange. It is digital money (no coins or dollar notes) and all of the processes are online and people can transfer funds to each other without the approval of any bank or something and this may attract the people who want to make a quick transfer and without any transfer fee.
People were still having problems figuring out the internet in the 90s while a group named Cypherpunks figured it out and came to know how powerful this internet is. They thought that by putting money in the bank’s people are giving much power to the government and corporate sectors and they also did not trust the third parties so to counter this they introduced the new concept of currency i.e.
Cryptocurrency, they wanted to deliver the power to the people of their money so that they can transfer, withdraw any amount at any time. They created Digicash and Cybercash as the new digital currency system but still failed. Then in 2009, Satoshi Nakamoto introduced Bitcoin which later proved to be successful. Satoshi Nakamoto looked closely into the faults of Cypherpunks and created a successful digital currency system.
Bitcoin used a Blockchain which performs the function of removing third parties and recording every transaction that takes place. The information is recorded in blocks arranged linearly and it cannot be erased and everyone can see it. Users can make transactions on their own free will but cryptocurrency uses a process called Mining which ensures that the users are not making any illegal transaction but works efficiently. This started to give rise to cryptocurrency and possibly in the future, this will be the main currency in the whole world. This all shows the investment potential of cryptocurrency Some of the points are given below:
1. Profitable returns
Due to the less exposure to the internet, people do not trust the new digital currency. However, it is the most profitable investment. Solid 20% return is the highest expected from a US stock while the investment potential of cryptocurrency shows a wide change in its price over in a short time. It is risky but has a high return potential and most people who lose money in the cryptocurrency are those who invest without having any strategy.
2. Independent money
The advantage of investing in cryptocurrency is that the power lies in the hands of the user. While most people place their money in the banks which gives them control and they can limit or close your access to your account. Whilst cryptocurrency provides complete independence to the user and he can transfer funds etc. any time, anywhere.
3. High liquidity
Cryptocurrency has very high liquidity as they are very easy to sell and purchase at a price very close to the market rate. This is one of the important characteristics of an asset. This provides ease for the users whether they want to sell the currency or purchase it.
4. Simple investment
Investing in something, may it be bonds, stocks, etc. requires the person to go through a lot of complex processes. For example, you have to fill a lot of forms, submit a sum load of money and then all have to be signed by the bank or the concerned department. The cryptocurrency is a simple way of investment, you have to create an account, get a wallet, and track all the assets. This is the investment potential of cryptocurrency. It is also included in the best marketing campaigns.
The user and investors can convert their funds into digital money and then can hold them in their hands powerfully and more secured. The main aim of investing in cryptocurrency is to bypass the traditional banking system and create such a way for the currency which could not be devalued by the central banks and allow them to proceed with the transaction without any fees.
As we know nowadays most of the payment is being made through the online transaction and as we know it, soon every payment will be digital so cryptocurrency provides various options for these payments and provide better advantages over debit and credit cards.
7. No barrier
Bank transactions limit the customer to the payments and transfer of funds within the country while cryptocurrency makes the international trade for the customer more accessible for the customers and making it easy to accept different currencies.
8. Instant Payments
The digital currency allows people to make payments instantly while the credit cards or debit cards might take a day, days, or weeks with no surety when the payment will be made.
The cryptocurrency market is available for almost 24 hours because there is no controlling centralized government. This transaction takes place between individuals directly.
The account owner does not need anybody`s permission nor is answerable to anyone and can transfer digital money to anyone of any amount.
No doubt, cryptocurrency is the future. But before becoming the main currency, it has a lot of obstacles that it has to overcome. The large financial institution does not consider this suitable for a long term asset so being open to the idea of investing in cryptocurrency still opposes it and provides resistance against the investment potential of cryptocurrency so it does not be accepted globally yet now. Cryptocurrency also faces internal obstacles that it needs to overcome such as if the cryptocurrency becomes the main currency then the whole financial world would convert to digital currency and it could cause massive growth in blockchain size that DLM would become impractical. It is unclear that blockchain technology would work successfully where the high speed with high volume is required. But this currency is very important and can increase trade all around the world. This should be encouraged in Pakistan as it would help the local businesses to communicate and trade with international businesses in a matter of seconds and can receive money without any additional fees, quickly and in any currency.