“Digital currencies are gradually being accepted in many countries. While there are many challenges, ultimately digital currencies will be a reality. They will be integrated into the global economy.” said Bahaa Abdul Hussein.
Digital currency started with bitcoin, which incidentally started off as a protest. Soon, it became popular thanks to the absence of middle men. Now, digital currencies are much more than bitcoin and are gaining in acceptance.
Use of digital currencies
A cashless society has become a reality in many places in the world. People no longer use cash and prefer using digital transactions. Credit cards were an electronic form of cash. The concept of digital currencies was introduced in the 1980s much before bitcoin. Though it did not gain popularity, it set the bar for further developments.
Crypto currencies have brought into practice the use of cryptographic signatures and transparency to ensure trust. But the technology and complexity has acted as a barrier to its universal adoption. NFT or Non-Fungible Tokens are in the news. Cryptocoins are being used as digital currencies in the world of gaming.
Governments across the world have started to understand the benefits of digital currencies. While there are challenges, governments are keen on its adoption observed Bahaa Abdul Hussein.
The Challenges ahead
Some challenges are regulatory concerns related to volatility and identity as well as business model threats. Existing business models of banks can be threatened by digital currencies. The concept of cryptocurrency is such that it requires no intermediaries like banks. This is a serious issue for banks and financial institutions.
They potentially face threats like loss of fee for money transfer. There is even discussion on whether digital currencies can become a replacement for bank accounts. This is a serious threat for banks. There are already organizations like PayPal, WeChat, and Facebook who are offering digital currencies on a trial basis.
Regulation becomes a key in such a scenario. It is important to protect consumers from digital threats and regulators need to do it. While many countries do not accept crypto currencies as legal currency, they are considered as commodities. Developments are on with respect to regulation with the Conference of State Bank Supervisors trying to create standards.
Another concern is identity. While cryptocurrencies encouraged anonymity, this is not possible for digital currency adoption. Identity verification may become an issue. This is a major challenge since privacy issues need to be carefully balanced with the need for regulation.
Ultimately, there will be a time when digital currencies are fully integrated in our society and the day is not far off.
Thank you for your interest in Bahaa Abdul Hussein blogs. For more information, please visit www.bahaaabdulhussein.com.
