Around 15,000 businesses across the world accept digital currencies now. The crypto market is poised to rise at 12% CAGR by 2028, clocking in around $2.8 billion in revenue. 2022 had been a tumultuous time for the crypto industry overall given 3 devastating crashes but there have been landmark developments amid the disaster as well. 2022 will also be remembered as a year when Ethereum officially shifted to PoS blockchain. Cardano had its long-awaited Vasil fork this year. Also, there are over 600 crypto exchanges selling digital currencies. Put simply, the digital currency industry is unstoppable now.
So, what are the factors that are driving the growth of cryptocurrency today?
Significance of cryptocurrency
The key difference between digital currency and traditional fiat currency is absence of centralized control. Fiat currencies are issued by national governments and are governed by centralized banks. As a result, there is always the risk of bureaucratic red tape in traditional financial services. Moreover, every transaction with fiat money involves some kind of middle-men. As a result, fiat transactions carry expensive fees and also take a while to process. Regional wire transfers within the border costs around $30. International transactions command even higher fees. In regard to speed, it takes no less than 3 days to process stock trades. You will have to wait for at least 24 hours for wire transfers.
But, digital currencies have eliminated the problems mentioned above given their decentralized advantage. Crypto projects are not issued by central governments and are not controlled by centralized banks. Digital currency transactions are always direct P2P and do not involve any intermediary. As a result, crypto transactions can settle within seconds and minutes (including international ones) and also cost just a fraction of traditional fiat transactions.
Creating fair ground in global finance ecosystem
According to a recent report, nearly 1.7 billion people belong to the unbanked category across the world. The proportion of unbanked populace is certainly higher in developing and 3rd world countries but the first world nations too bear witness to the issue. Around 5% of American households belong to the unbanked category.
One of the major reasons behind the problem is high transaction fees charged by banks for financial services. Expensive banking fees have created a sharp discrimination in the current financial ecosystem, thereby pushing away a larger population that is unable to afford the banking fees. But financial services should be affordable for all and there must be an even ground for all to participate in.
The other problem is lack of physical proximity to financial service organizations like banks. As a result, a lot of people staying in remote villages are unable to access banking and other related financial services.
How are digital currencies resolving the pain point?
Digital currencies attempt to eliminate the problem by creating accessibility to financial services for all people, irrespective of their financial background and location. Crypto transactions do not operate in a centralized environment, unlike traditional financial services. Thus, the decentralized nature of crypto transactions makes them easily affordable for people from different kinds of financial backgrounds. In other words, people from lower economic backgrounds too are able to access financial services through digital currencies.
Then, digital currencies operate strictly on the virtual plane. As a result, people don’t need to travel to a physical location to execute the financial services.
Thus, one of the best aspects of digital currencies is that the crypto industry is proactively contributing to democratizing the financial ecosystem.
Safety and security
Digital currency transactions are always recorded in an immutable blockchain ledger and all data is protected by impenetrable cryptographic protection. As a result, digital currency transactions cannot be manipulated. Also, crypto transactions don’t carry chargeback issues. buy bitcoin
Global reach for small businesses
This is another point where digital currencies score over traditional fiat currency.
Expensive international transactions costs had been a major barrier for several small cap businesses aspiring to expand beyond the border. Thanks to low transaction costs of digital currencies, even small cap businesses now can reach out to markets beyond the border to execute cross-border trade without worrying about huge capital investment.