Cryptocurrency as a digital asset has come a way forward since its inception. Though we know that cryptocurrency (bitcoin) was introduced to the world by Satoshi Nakamoto, there is some evidence that supports its origin in the USA where an electronic money or ecash was developed in America by a cryptographer, David Chaum in 1983.
Bitcoin is surely the most popular cryptocurrency ever and has been solid as a digital asset. Considering the potential of cryptocurrencies as digital assets in the USA, in a span of a few years, they have grown digital novelties to trillion-dollar technologies with the ability to disrupt the global financial system including the USA. In America, bitcoin and hundreds of other cryptocurrencies are often used to buy a swath of goods, such as digital real estate, software, and others.
To their proponents, cryptocurrencies are a democratizing force, grabbing the power of money creation, and control from central banks and Wall Street. As of February 2023, the United States is considering launching their central bank digital currencies (CBDCs).
What does this indicate? It slays the power or potential of cryptocurrencies to become a mainstream currency in digital form. Here are some factors that show what empowers cryptocurrencies as a digital asset in the USA-
The Advantages of Cryptocurrency:
Cryptocurrencies offer various benefits that distinguish them from traditional forms of money:
- Decentralisation– For years we have seen currencies being administered by the central bank of the country. The apex bank used to control the power of money in the country as it has only the authority to set the rules of money regulation. In 2008, for the first time, someone came up with the technology and approach where the central bank had no authority to control the regulation of money or say digital money. This was decentralization where money used to be controlled by group members only, not a central authority. People in the USA took it as a currency they always wanted and kept its continued uses.
- Financial Inclusion: Cryptocurrencies have the ability to foster financial inclusion by providing unbanked and underbanked populations with access to financial services. Individuals can take part in the global economy and conduct transactions using only a smartphone and an internet connection, eliminating the requirement for a traditional bank account.
- Security and Transparency: To ensure secure and transparent transactions, cryptocurrencies employ advanced cryptographic techniques. Because blockchain technology is decentralised, hackers find it difficult to manipulate or tamper with transaction records.
- Lower Transaction Fees: Because cryptocurrency eliminates the need for intermediaries such as banks or payment processors, transaction fees are reduced. This is especially useful for cross-border transactions, where traditional methods frequently involve high fees and long processing times.
The Impact of Cryptocurrencies on Industries:
Cryptocurrencies have the potential to transform various industries:
- Healthcare:Blockchain technology and cryptocurrency can help elevate healthcare data management and privacy of patients. Patients have more authority over their data and are able to safely share it with healthcare providers by storing medical records on a secure and decentralised network.
- Finance and Banking: Cryptocurrencies are posing a threat to the traditional financial system by enabling faster and more efficient transactions. Blockchain technology allows for the creation of decentralised finance (DeFi) applications, which allow individuals to lend, borrow, and trade digital assets without the use of intermediaries.
- Supply Chain Management: Blockchain technology has the potential to improve supply chain accountability and traceability. Cryptocurrencies can help confirm the authenticity and provenance of goods by recording every transaction on an immutable ledger, reducing fraud and counterfeiting.
Potential Challenges and Risks:
While cryptocurrencies hold immense potential, they also face certain challenges:
a) Regulatory Uncertainty: The United States’ central government is debating how to effectively regulate cryptocurrencies. Regulatory frameworks are still evolving, and there are still concerns about taxation, security, and investor protection.
b) Volatility: The price volatility of cryptocurrencies is well-known. Investors can experience significant financial gains or losses as a result of rapid price fluctuations. This volatility could discourage mainstream adoption and jeopardise financial system stability.
c) Security Concerns: Despite the fact that blockchain technology provides strong security, cryptocurrency platforms and exchanges have been attacked by hackers. It is critical to protect users’ funds by guaranteeing the security of digital wallets using best practices.
The Future of Cryptocurrency:
The future of cryptocurrency holds vast potential:
- Central Bank Digital Currencies (CBDCs): The central bank of America is exploring the concept of CBDCs, which would be its own digital versions of traditional fiat currencies. CBDCs focus on combining the advantages of cryptocurrencies, such as efficiency and transparency, with the stability and regulatory oversight of central banks. Implementing a country’s own CBDCs would also mark history in the finance system since it would be revolutionary and remarkable and America would always want to be the first one in this segment.
- Mainstream Adoption: Growing acceptance by individuals, businesses, and financial institutions can propel cryptocurrencies into the mainstream. Integration of cryptocurrencies into payment systems and the creation of user-friendly interfaces can help to increase acceptance and usage. Also, making cryptocurrencies more user-friendly will boost its adoption to the non-technical population and thus its impact as a digital asset would grow bigger than ever.
- Innovation and Technological Advancements: As technology evolves, cryptocurrencies are likely to see further advancements, such as enhanced privacy features, faster transaction speeds, and improved scalability. These advancements can encourage adoption and open up new possibilities for digital assets. America has always been keen to bring revolution to FinTechs, and it would surely like to innovate the source of cryptocurrencies seeing its huge potential to grow forever.
Conclusion:
Cryptocurrency embodies a paradigm shift in the financial and technological worlds. With their ability to give secure and transparent transactions while also promoting financial inclusion, and allowing larger populations to adopt it with more conviction. Though there are some challenges to make cryptocurrencies more advanced, for sure America as the most developed nation can tackle every problem efficiently and conveniently.
