The Future of Cryptocurrency: A Comprehensive Analysis

This essay explores the uncertain future of cryptocurrency, examining its potential to replace traditional currencies and its vulnerabilities to illegal activities. It begins by defining cryptocurrency and highlighting its rapid growth, particularly Bitcoin's surge in value. The essay discusses various perspectives on cryptocurrency, noting both optimistic views and concerns about its use in illicit finance and its price volatility. It argues that while cryptocurrency offers advantages such as faster transactions and reduced costs, it lacks widespread adoption and a stable store of value, unlike government-backed currencies. The essay also addresses the potential for cryptocurrency to finance illegal activities due to the lack of regulation. Despite these challenges, it acknowledges the opportunities presented by cryptocurrency, such as providing financial services to unbanked populations and facilitating international transactions. The essay concludes that while the future of cryptocurrency is uncertain, it could play a significant role in shaping the future of financial transactions, especially with the emergence of national cryptocurrencies and ongoing innovations in the field.

Running head: FUTURE OF CRYPTOCURRENCY
FUTURE OF CRYPTOCURRENCY
Name of the Student
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Introduction:
Since the world is developed into so called modern society the medium of exchange
goods or services is transformed from a barter economy to money as certified paper issued by
government. Money is basically a piece of paper used to intermediate the exchange of goods.
Money is utilized by everyone to store a specific value in that. Employee agree to get money in
exchange for their effort (labor). Merchants sell their goods in exchange of money. The whole
transaction process of goods and services are held by utilizing money. According to Greek
philosopher Aristotle there are four criteria that assist to dictate what is considered to be “Good
Money”. It must be durable, portable, and divisible and must have intrinsic value. From the era
of barter to flat money, gold, metal, and coins continued by modern systems and checks and
validating with latest medium of currency developments (Extance, 2015). The most evolved
medium of transaction is crypto currency which began to emerge in late 2009 to assist fix some
of the issues. Crypto currency can be define as a digital currency which utilized cryptography for
better security. However, the focus around it heavily grows in 2017 whether value of one bit coin
(the most popular crypto currency) increased to 13,680 US dollar. Everyone these days prefer
digital transaction rather than typical cash exchange. Some experts believes, cryptocurrency is
the key of revolution to change the whole transaction process in term of durability, portability,
and divisibility. This paper investigates many resources associated with uncertain future of
cryptocurrency to develop a clear theory and demonstration. The writing also inquire many
possible uses of cryptocurrency which could be applicable in near future.

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Figure 1: use of digital Payment
Source :( Luther, 2016)
There are several opinion regarding the future of crypto currencies in general. Some with
emancipation views of life are embrace and optimistic the crypto currency while other are not
enthusiastic about the use of this type currency like bit coin for financial and payments transition.
It will be enable fast transaction of funds between multiple parties (Nian & Chuen, 2015). This
transaction will be held while measuring and ensuring security concerns, most likely by utilizing
private and public keys. This type of transaction will also propose minimal processing cost
unlike banks where steep fees are charged for most of the transaction.
On the other side, the crypto currency can be utilized financing illegal activities and
money laundry. According to Tymoigne, bit coins are illiquid and showed high price volatility
(Walton,, 2014). He also explained that why the discounted cash value of bit coin is zero. Crypto

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currency are not viable electronic currency because it lacks a central issuer (Government in case
of Money) and there is also no economic and financial basis for its creation.
Replace the current currency:
Some authors are considering the possibility that crypto currency for its flexibility over
transaction speed and availability. However, most of them doubts that it will ever become
mainstream currencies. There are two basic thing it lacks as widely adoption and storage of
value. As explained in the introduction, the medium of exchange needs to be adopted by
everyone in order to make it work (LEE, GUO & Wang, 2016). The most important aspect
crypto currency lacks is widely adoption. Even though, the digital payment transition rate is
overgrowing, still it’s used as a faster transaction process where physical form of money is
involved. Generally, currency itself has no values such as gold, sea shell and metal which are
worthless as a paper in term of usability (Finney, 2018). Currencies only have value while can
be used to buy goods and services which are essential for individuals’ daily life. Government
backed currency has huge advantages for those terms. Government set taxes and collets the taxes
from every individual annually. People will always prefer the government backed currency as
they are useful for paying taxes. Some company can exchange goods through the crypto-
currency. However, they need to pay corporation taxes, sales and payroll taxes in government-
backed currency. If government refuses to accept crypto currency the demand of this will
decrease gradually.

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16-Jan
Feb
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17-Jan
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0
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16000
Bitcoin price index from January 2016 to April 2018 (in U.S.
dollars)
Bit-coin price index from January 2016 to April 2018
Source: (Delmolino et al., 2016)
Another role of the currency is to store certain value in them. Every country has their
own distinct currency which hold different value as well. In order maintain store of value, central
banks take a lot of trouble to keep a currency's value roughly stable. It is necessary to make sure
that the currency value matches the demand. In case of Crypto currency, it cannot achieve the
balance. The value of crypto currency will collapse if the demand fall (Delmolino et al., 2016).
For context, Bit coin values decreased in the September was very vital, even worse than German
mark at the start of the Weimar hyperinflation. The possibility of limitless supply of several
crypto- currency will create the risk of further collapsing.
The Currency of Crime:
While it cannot be used as a replacement of a main currency, crypto currency can be
utilized to finance illegal activities. The banking regulation and transparency along with more

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sophisticated attempts to identify money laundering have reduced the supply of government-
backed money to the illegal economy. As the crypto currency evolves, the rules and regulation of
the uses are not specified by any certified authorization. Some countries does not even have any
specific set of law regarding the crypto currency. Many scammers will find new alternatives to
gain advantage of the new currency system (Darlington, 2013). The issue with crypto-currencies
as criminal-currencies is that the criminal economy is not a closed economy. The illegal and
legal economics would have a converse rate between crypto-currency and government backed
currency. The mandate for illegal services and goods from otherwise law-abiding citizens, and
perhaps with the consequences for crime. This would make for an unclear store of value, in a
way that a cash-based criminal economy does not.
Opportunities:
Despite the lacks of widely adoption and store of value, there is a huge potential of Crypto
currency. It can solve many issues which cannot be solved by current currency. Through peer-to-
peer system it could assist remediate the problems associate with unbanked customer. In Latin
America, 601% of 600 million populations have no access to bank accounts (Al Shehhi, Oudah
& Aung, 2014). Crypto currency allows for individual persons to exchange currency without
needing a third trusted party, like a bank, to oversee the transaction. Due to the Ad-hoc
technology money can be trade through QR code. Other Opportunities are followed:
 One of the largest opportunities is that it can also act as a sort of commodity, similar to
gold.
 An effort to further constrict control of the company’s logistics costs.
 Businesses are beginning to see the value in using crypto currencies for international
transactions, especially when need to occur quickly in response to an emergency.

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Conclusion:
The forms of crypto currency have already emerged and have gained followings of their
own, and each slightly different from Bit-coin and arguably as valid. Some nations like Iceland
have even begun to start their own national crypto currencies. However, the future of the crypto-
currency is unimaginable. Experts believes the current currency will also altered by some new
type of medium which will be more flexible and durable. Crypto currency can be the key of
revolution to change the whole transaction process in term of durability, portability, and
divisibility.

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Reference
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