Introduction
Cryptocurrency is the currency that uses digitalized files or assets as a medium of exchange created using the same method. Cryptocurrency is not controlled by an individual or by any government as electronic money. The distributed ledger is the financial transaction database for cryptocurrency, and it contains all the records. Bitcoin is an example of a cryptocurrency, and it was released in 2009 (Birch 7). More than 4000 cryptocurrencies have been created and are widely used.
Positive Argument
Cryptocurrencies involve transferring funds from one party to the other directly without involving a third party such as banks or a company. The transactions should not be doubted as they are secured by both public and private keys only accessible by the user to sign transactions (Salman and Muthanna 66). With cryptocurrency, transactions or payments may be completed with minimum transaction charges which are less than the high processing costs charged by the financial institutions for cash transfers and payments.
Cryptocurrency depends on digital technology to finish all of its transactions. The nature of online transactions does not allow forgery and stealing to take place. If the currency is adopted, it will solve forgery and robbery that have been threatening the financial institutions. The transactions will involve only two parties, and hence the privacy of the information between the customers is achieved. Third parties who may have bad intentions such as getting the money by force from the trading partners may not be possible as they have no information of what may be happening between them (Birch 26). The unique nature and computer-generated and signed transactions will not allow forgery teams to make anything similar to the currency.
An increase in the money supply of any economy raises inflation. Similarly, accrued wages and salaries mean that the money that should be in the pocket of the people is not effectively used. Cryptocurrencies might help curb inflation because some of their currency items such as Bitcoin are structured to decrease fixed rates after every few years, resulting in deflation. Cryptocurrency will also reduce monetary circulation in the economy, reducing the consumer’s spending or purchasing power, which will also deal with the inflation rate.
Opposite Argument
People do not understand cryptocurrency; it will be hard to be embraced as the currency because this will mean that the users will have to be trained on how it is used. Training will consume much time that would have been invested in something else. Cryptocurrency’s definition alone leaves many people wondering how the currency can be used. It requires a more profound understanding to understand the concept behind its adoption. Cryptocurrency’s definition and use can be well understood mainly by literate people, which is contrary to the use of money as a means of exchange (Schar and Berentsen 89). Taking money as the mode of trade that involves paper money does not require any explanation as opposed to adopting the digital asset in financial transactions.
People fear cryptocurrency because it is not classified as a legal tender by the United States. Cryptocurrency is not known, and it may take much time to convince people to start using it as they may feel that it is not classified as legal tender; hence, is not bound by federal law or not regulated (Schar and Berentsen 19). Cryptocurrency, as to the definition, is not controlled by any government or by an individual; is decentralized.
Cryptocurrency’s semi-anonymous nature of its transactions makes them well-suited for a host of illegal activities that may include tax evasion and money laundry. Suppose the currency is implemented as the currency of any economy. In that case, there are high possibilities of tax evasion as it is hard to monitor cryptocurrency transactions as compared to monetary ones. Adopting and using the currency may also enhance and encourage illegal activities such as money laundry with the same reason of the difficulty in monitoring the financial transactions transacted using cryptocurrency (Salman and Muthanna 30). The current privacy nature makes it difficult to trace the transaction and attach it to the concerned individual.
Cryptocurrency should not be embraced as a medium of exchange because some countries do not accept it. It would be good to adopt a currency that can be traded worldwide, for instance, U.S Dollar. Introducing cryptocurrency may be difficult to be accepted by some countries because of its nature. This may take much time to convince the nations that are unwilling to adopt the currency. If the currency fails to be adopted by all the countries, it will be difficult to trade using monetary currency while the other states use cryptocurrency. The valuation of the good being traded may not be accurate because of using two different currencies.
Cryptocurrencies involve the use of digital technology, which may be subjected to cybersecurity breaches such as hackers. Several account hacking cases that resulted in investors using cryptocurrency and losing money discourage people from adopting the currency. Mitigating the cybersecurity issue may be difficult because all the processes of payment and all the transactions are done using digital technology.
Compared to other means of payment, cryptocurrency takes much time to complete the transaction. Digital coin adoption is increasing, but the speed at which it is used to complete a single transaction is staggered. The currency may not be appropriate to be used to complete transactions that are supposed to be done urgently (Brunton 5). Adopting the currency may delay transactions and delivery of goods or services being traded rendering the currency not fit for adoption.
Conclusion
Cryptocurrencies should not be embraced as the medium of exchange as they pose more risks than positive impacts. The importance of using cryptocurrency may as well be realized by good use of the monetary currency. The utilization of digital technology can also be used in online banking, which is safer, accepted, and faster than cryptocurrency. Transferring funds or payments using cryptocurrency that does not involve the third party is risky as there is no witness to be consulted in case of any misunderstanding later. The digital transfer of the fund alone is not enough as this can be manipulated by anyone who may access the information.
Cryptocurrency may not fully solve the problem of investors losing money through cybersecurity breaches. The nature of the transactions being done online alone scares the parties involved and the safety of the information may be doubtful. Introducing a currency that depends on the internet and technology might have loopholes that may make the investors continue losing money. The best way is to find out how to enhance the monetary currency and eliminate gaps for cybercrimes.
Works Cited
Birch, David. The Currency Cold War: Cash and Cryptography, Hash Rates and Hegemony. London Publishing Partnership, 2020.
Brunton, Finn. Digital Cash: The Unknown History of the Anarchists, Utopians, and Technologists Who Created Cryptocurrency. Princeton UP, 2020.
Salman, Asma, and Muthanna G. Razzaq. Blockchain and Cryptocurrencies. IntechOpen, 2019.
Schar, Fabian, and Aleksander Berentsen. Bitcoin, Blockchain, and Cryptoassets: A Comprehensive Introduction. MIT Press, 2020.