update 15 October 2021

Is Cryptocurrency the Future of Finance and the Economy?

When Bitcoin first appeared on the digital scene in 2008, the world snubbed it. Sure, it happened during the economic crash, but traditional banking institutions couldn’t become obsolete overnight due to cryptocurrency.

Or could they?

What started as a trend quickly turned into an opportunity for people worldwide and a threat to others. Today, over a decade later, Bitcoin is a global sensation. But, can cryptocurrency be the future of finance and the economy?

Crypto vs. Traditional Finance

The crypto world has the potential to change the balance of both finance and economy with tsunami-like force. Furthermore, banks and traditional intermediates like brokers feel the wave coming. Also, some governments are taking steps to contain the water from spilling.

For example, the Chinese government has been cracking down on its mining and crypto businesses. Over 20 companies left the country to survive. China and other Bitcoin opponents believe cryptocurrencies are volatile and they pose a risk of tax evasion. Truthfully, the more significant risk is for banks and the government itself because digital currency is independent.

Furthermore, crypto doesn’t need any supervision from third parties. And that’s what users like about it. The latest report from Robinhood proves the public’s preference for digital assets. According to the document, during the first four months of 2021, over 9.5 million users invested in crypto. Meanwhile, the exchange platform has reported revenue of $750 million up until October this year.

So, while governments choose to ban cryptocurrency, citizens decide to believe in it. Why? This is a democratic system with equal opportunities. If someone has the means to invest and trade, then nothing can stop the investment. People have equal access to cryptocurrencies, while they don’t have equal access to bank accounts or loans.

Cryptocurrency vs. Traditional Banks

Some banks might admit that cryptocurrencies are the future of finance and of the economy. For instance, the American Federal Reserve has announced its research into creating a Central Bank Digital Currency (CBDC). The fact that the American government is considering this step shows that the future is crypto.

On the other hand, citizens have the same chances to consider a digital asset immune to inflation and supervision. For example, monetary policy does not affect Bitcoin and other currencies. Also, while it’s’ not a miracle maker, cryptocurrency can help distribute wealth more fairly.

Decentralized finance is genuinely democratic and, while it might not replace traditional finance, it’s a great alternative. After all, it only takes a smartphone to start trading.

“When the man in the middle is in charge, the vast majority of wealth creation goes to the man in the middle, and those close to him,” said Quantum Economics head analyst Lou Kerner to Cryptonews, “now we can collectively create wealth, and distribute in a more fair way.”

Crypto is accessible, immune to restrictions, and even younger generations can benefit from it. On the other hand, the traditional banking system is the opposite. For example, almost 2 billion people in the world don’t have a bank account. So, many people in developing countries cannot access the same financial services that first-world countries have.

Digital assets, blockchain, and crypto can empower everyone in the world financially.

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So, is cryptocurrency the future of finance and the economy? From this perspective, undoubtedly, it is.