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The opinions expressed by the entrepreneur's contributors are their own.
We are officially in the fintech age. The switch to digital payments has only accelerated in the wake of the pandemic. If you've followed recent trends, you know that the rise of Bitcoin and other digital currencies into the mainstream has had a profound impact on financial systems and how they work in the world.
According to analysts, one of the main reasons central banks have not yet accepted cryptocurrencies is the threat to their own agenda with government-issued currencies. However, the technology behind digital currencies is real and people are increasingly switching from traditional payment methods to digital currencies because of the speed and ease they offer. While many are still on the fence, the price of Bitcoin has hit an all-time high of nearly $ 20,000.
More and more people welcome the idea of digital currencies as a means of transferring value – especially across borders.
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Will Bitcoin Replace Government Currency?
There are many fintech startups dealing with payment issues. However, will paper currency be out of date in this digital world? Will Bitcoin and other digital currencies replace the dollar and other currencies currently used around the world?
These questions are asked by both skeptics and early adopters. Many consumers are concerned about the long-term value of digital currencies like Bitcoin and how it will affect future profits for them because of the inherent price volatility. For example, the price of Bitcoin rose more than 140% in 2020, but fell more than 50% in 2017, when measured against government-issued currencies such as the dollar.
However, at the moment the paper currency is still used very widely. It is still the best known source of transactions, especially in rural areas or in thriving economies where residents do not have bank accounts. Even if you owned digital currency and wanted to pay for a purchase, the merchant would need to be able to accept it as a form of payment. If the merchant cannot do this, you will need to convert your digital currency to paper currency or its digital equivalent. However, when current statistics are in, we see a significant change in the way people carry out their daily transactions and payment needs, which is only compounded by the rising value of Bitcoin as an asset.
Digital currencies guarantee ease, convenience and speed at a very affordable cost. In a split second and without having to go through different payment gateways, you can send money to a counterpart in Africa or any other part of the world. Digital currency payments are also free from the control of governments and their agencies.
Should the nations' central banks issue their own digital currencies? Issuing their own digital currencies would add further credibility to the benefits of the blockchain they are working with. One factor that may hinder this possibility is the decentralization system that digital currencies are used to operate. Governments and their agencies prefer to stay in control, even if that means not using the most innovative and transforming payment solutions of our time. After all, most of the existing banking technologies are almost 50 years old.
Including digital currency disruptions
According to a report by Senior Fellow of the Brookings Institute, Eswar Prasad, "The disruption of traditional central banking with digital currency is worth considering whether the emerging changes in money, financial markets, and payment systems will have a significant impact on central bank operations and capabilities achieve important goals such as low inflation and financial stability. "
Digital currency is to the financial system what email was to communication. We must now embrace the new reality that digital currencies represent. We cannot be in a global economy and continue to act like a small town, held back by local restrictions on payments and excessive fees, and unnecessary taxes on transactions and financial systems that need to be overhauled.
The digital transformation
Some have argued that digital currencies are not yet applicable to everyday living and payment needs. This may have been the case with the introduction of Bitcoin in 2008, but with rapid innovation in digital currencies, it is rarely the case today. Countless startups have sprung up to overcome the obstacles associated with the daily use of digital currencies.
In 2017, Ian Kane and Daniel Gouldman, co-founders of Ternio, identified an issue affecting Bitcoin and other digital currencies. The problem they saw was that all digital currencies (including Bitcoin) only had use cases on the internet, like online marketplaces or trading on exchanges. In short, there is nothing you can do with your Bitcoin other than trade online or speculate on the future price.
As Angela Scott-Briggs put it in a post for TechBullion, "The Ternio team understood that blockchain technology was far more efficient in terms of cost and speed. What was missing was a user-friendly way of taking digital currencies and using them use." The financial system is already used and understood by people like credit cards or bank accounts. "
To address this issue, they launched Ternio and their BlockCard product, a digital currency debit card that allows consumers to use their Bitcoin for their everyday purchases. It became an easier option than finding knowledgeable and willing traders who would accept Bitcoin or other blockchain-based assets.
They saw immediate success and today Ternio's platform connects traditional businesses, fintech, banks and systems with a blockchain infrastructure that brings real value to digital assets.
Are we close to the next decade of payment innovation?
As the success of Ternio underscores, digital currencies are actually changing payments through instant transfers and value transfers on blockchain, surpassing the standards set by the current financial system. Some of the biggest names in payments are jumping on board as well.
Digital currency is a lot to different people. For some, it's a store of value; for others, it is a speculative asset that can make a profit. And even more so, it is economic freedom. Like the internet in the early days, the shift can start slowly, but it happens quickly once it reaches a tipping point.
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What guarantees is that digital currencies will stay here. With its secure, decentralized and global availability in connection with far-reaching innovations, it changes payments quickly. The real question is not whether you, the reader, should get on board, but what is holding you back from taking the plunge.