Would you be willing to receive your wages in cryptocurrencies? As the growth of cryptocurrency is increasingly rampant, there are already companies offering this method of payment to their employees. It would have been impossible to think about receiving your wages in cryptocurrencies before, but is it now?
Companies offering this method of payment provide the option to their employees to receive cryptocurrencies in full or only a portion of their wages. Despite this, one of the major disadvantages of cryptocurrencies is the fact that it is a highly speculative investment. Hence, the value can easily crash to zero at any time.
Although Bitcoin and its digital currency are increasing in popularity, this is not reflected in proportion to their everyday use. When Bitcoin was initially created, it was done so to cater to transactional purposes. However, people picked up cryptocurrencies as an investment vehicle because it can provide high levels of return within a short time. The payment processor Stripe recently cut off ties with Bitcoin because it claims that the platform has a slow transaction time and there are high fees associated with Bitcoin transactions.
With the myriad of problems that Bitcoin has, it is clear that Bitcoin and its cryptocurrency counterparts are not ready for their debut into the mainstream world. In fact, the infrastructure is nothing compared to established payment processors such as MasterCard or Paypal that can process thousands of transactions within a second. In comparison, Bitcoin can only process single to double-digit transactions per second.
However, it is clear that the generation ahead is leaning towards the growth of digital currencies because most of us will live a digital cash lifestyle. This is why blockchain has grown in popularity, as it opens up the opportunity to create secure and efficient peer-to-peer transactions. Here are possible things that could happen to cryptocurrency in the future.
What can we expect from cryptocurrencies in the future?
First and foremost, it could come from the Federal Reserve, which is trying to issue their digital currency. In fact, many other companies, such as Amazon and Walmart, are trying to explore the concept of creating these currencies to pay for their services. However, it is expected that the cryptocurrency that they create can only be used within their system. This is a good proposition because more people are more willing to buy from these corporations who are giants in their respective industries.
In addition, this will surely inspire trust in cryptocurrencies. As these retail giants start to accept cryptocurrency into their system, the value of their currency can rise above the current major cryptocurrencies because they already have a huge user base prior to cryptocurrency adaption. This would be a breath of fresh air because we have not seen a cryptocurrency used so widely for a method of transaction.
As a direct impact of the situation, it may threaten the sanctity of current monetary policy and the national currencies that we have. In fact, it is easy to see why people would prefer to use cryptocurrencies daily. People reduce the risk of theft by ensuring that their virtual assets are kept on the blockchain. The convenience level associated with virtual currency also makes it highly preferable compared to real cash.
This is perhaps one of the reasons why many tech entrepreneurs and investors are turning to blockchain startups to invest in the technology. However, not everyone believes in the potential of cryptocurrency. For instance, JP Morgan’s CEO has been very vocal about how he believes that Bitcoin is a fraud. Warren Buffet also projected similar negative opinions about cryptocurrency.
In the future, commercial banks will still have to play an important role in consumers. As our lives are mainly governed by centralized currencies, it will continue to provide a stable form of value for our daily transactions. It will take some time before cryptocurrencies can completely take over the job of a centralized bank. In addition, governments will try their best to avoid cryptocurrencies taking over the national financial system because it is not a sustainable way to do daily transactions.
Central banks want to issue their cryptocurrency
Central banks are among the stakeholders who are interested in issuing their digital currency. In fact, there have been several banks that are looking into this possibility. It is believed that having a centralized digital currency can help make monetary policy more flexible and allow for negative interest rates. Moreover, it is simple to store these centralized currencies into a digital wallet. It is also traceable in the sense that any fraud done using the cryptocurrency can be tracked down to a particular individual or entity.
Bank of England has recently revealed that having a centralized cryptocurrency can help to boost the GDP by 3%. This mainly comes from reducing the cost transaction. However, the bank has to think twice before they want to adopt the centralized cryptocurrency because they will disrupt the source of capital that they have through the transaction fees.
Cryptocurrency’s growth in a nation is highly dependent on that nation’s stance. There are different ways that cryptocurrency regulations can play out. Firstly, the government can take a blanket approach like China who completely banned the trading of cryptocurrencies. The government can also steal the spotlight from cryptocurrency by issuing their centralized cryptocurrencies.
Another big player for cryptocurrencies
Despite this, experts remain optimistic about the potential of cryptocurrency models if there are trusted bodies backing them up. For instance, Starbucks could be a potential company to adopt the usage of cryptocurrencies. As they have strong branding, this will inspire trust within the cryptocurrency that they release. Despite this, Starbucks has been reported to not invest as much into the cryptocurrency future as of now.
Amazon as a key stakeholder in cryptocurrencies
Another corporation that has been reportedly taking an active interest in cryptocurrency is Amazon. It is believed that they will accept Bitcoin or its digital rivals as a method of payment. In addition, Amazon has also registered several domains related to cryptocurrencies.
Let’s assume that Amazon will want to reward their customers in the form of cryptocurrencies. One potential situation is that customers will hoard these coins instead of using them to redeem a reward. The effects on sales and profits may go the other way than what was intended. Moreover, if a digital currency were to gain wide acceptance from retailers, the issuer will have to act like a central bank. In this regard, Amazon presents itself as a good body to potentially become the central bank. If this was to happen, could people count on Amazon?
Wrapping it up
Central bankers seem to be feeling agitated by the presence of cryptocurrencies. With the value of the dollar declining, more people are losing their faith in the dollar. As a result, more people are turning to investments such as cryptocurrencies. To think of it from another perspective, competition to central banks could keep them on their toes and prevent any runaway inflation.