Adoption of Cryptocurrency in the Financial Market

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Cryptocurrencu has really come a long way starting with the creation of Bitcoin in 2009 and it has been an interesting journey paving way for other cryptocurrencies and crypto related projects. In recent years cryptocurrency has gone mainstream as more and more individuals, Institutions and even government has began to explore this new financial system. However cryptocurrency still has its shortcomings and this is a hindrance on Global adoption.

What is adoption? To adopt something simply means to choose to take up or make use of something. Now the popularity of cryptocurrencies have grown massively due to the positive ideals of Decentralization and large gains that can be made. This fosters cryptocurrency adoption.

Cryptocurrency adoption refers to a time when cryptocurrency would be commonly accepted as a legal tender around the world for carrying out transactions. This when individuals, organizations and government begin to put a substantial portion of their net worth into Cryptocurrency that is adoption. For this to happen the government will have to play a role in it.

Cryptocurrency is a digital currency that can serve as an alternative to conventional currency, this is because it can be used as a means of payment and store of value. It is a fact that Cryptocurrency has revolutionized the financial market. It has eliminated the need for trusted third party while transacting, buyers and sellers can trade directly and anonymously all thanks to its P2P system. Transacting in cryptocurrencies is much faster and easy at a very low cost. It is a very safe and secure way to transfer funds.

These features of Cryptocurrency has encouraged adoption in the financial sector, government, Institutions and even organizations are involved in cryptocurrency. In countries like El Salvador the government have legalized the use of Bitcoin as a means of payment, recently Elon Musk announced that Tesla Merch can be purchased using Doge Coin, also Lionel Messi agreed to receive his monthly allowance in PSG Fan Token. All these are series of Cryptocurrency adoption in the financial sector.

How can businesses be boosted through Cryptocurrency transaction

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i. It draws more customers to such business, cryptocurrencies have become so popular and are being used by millions of people all over the world. So the community is very large, so when a business is cryptocurrency friendly or accepts cryptocurrency as a means of payment it will attract a lot of cryptocurrency users to patronize their business or services.

ii. It will allow businesses to trade or transact with customers who are very far away, this is because cryptocurrency facilitates cross border transactions,it helps businesses to evade rigorous bank processes and even government regulations. For example I receive project money from Xquake Charity in XRP to cary out charity project. Xquake is based in Croatia and I am in Nigeria.

iii. Businesses are assured of the safety of their funds when they are transferred it will surely get to the receiver without any interruption or delay, this creates trust which is what enables every business to thrive. Transacting in cryptocurrency keeps ones identity and personal information anonymous.

iv. Since cryptocurrency are not regulated it helps businesses to evade tax, this means they get to have more money at hand to reinvest back into the business. Also transacting in cryptocurrencies is very easy, fast and at a low cost. With this advantage businesses can carry out multiple transactions without any form of limitations.

What is your opinion on cryptocurrency being accepted globally

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If cryptocurrency is accepted globally as a legal tender for transacting in our day-to-day activities it will be a very welcome development and a positive one at that time. It will be helpful for cross border payments and this will bring the world closer because it will eliminate financial boundaries. It will decongest the banks as people can now perform such transactions at the comfort of their homes. This will enhance the payment system globally.

Cryptocurrency will offer a digital alternative to fiat Currency which is very easy to use. In countries like Zimbabwe, Venezuela with terrible domestic currencies, cryptocurrency has become a necessity because it can serve as a hedge against inflation because cryptocurrency has a limited supply. It can also be used to by pass or circumvent high taxes and capital control in countries that has high tax charge or very strict capital control to direct the flow of money.

Do you think that the high volatile nature of the crypto market is a concern to business owners

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Volatility means instability, that something is not stable and has an erratic movement, this is very high in Cryptocurrency when compared to other traditional assets. This is due to the forces of the market, demand and supply which determines the price of Cryptocurrency. When the demand is high their is an increase in price and when the supply is higher than the demand their is a decrease in price. Such kind of movement becomes a matter of concern for businesses. In 2017 Bitcoin rose from $1000 to $19,000 then fell to $3,000.

This is a matter of concern to business, because where the loss is greater than the gain, the business can become bankrupt. The volatile nature of Cryptocurrency cast doubt as to whether it is a good store of value, this because a crash in the market due to volatility can lead to loss in capital or massive gains if the price goes up. But this uncertainty is not good for business, it breeds distrust and sentiment.

However business owners can protect their business from the volatile nature of Cryptocurrency by making use of stable currency.

Factors that limit the adoption of Cryptocurrency

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i. Anti-Crypto Policy:

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This is a very big hindrance to the adoption of Cryptocurrency globally, government of various countries are implementing laws or regulations banning the use of cryptocurrencies, claims of protecting their financial market and citizens alike. This is because of the fear that Cryptocurrency can be used to circumvent capital control, taxes and it can be used for money laundering and other illicit activities. Countries like China, India, Nigeria have anti-crypto policies. These policies have negative effects on the price and progress of cryptocurrencies and it has alienated it's citizens from the opportunity cryptocurrency has to offer.

The solution to this situation will be for the government to stop being reluctant and create clear cut regulations that will address issues that cryptocurrency has as this will create a favourable and more transparent system for Cryptocurrency to thrive. Crackdown on Cryptocurrency only sparks more interest and instead of fighting it the government should create a pathway for adoption.

ii. Security Issues :

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Cryptocurrency depositories and exchanges have become targets for cyber attacks and these attacks are difficult to predict or attack. This leads to loss of funds, for instance in 2014 MT Gox was hacked and 850,000 Bitcoin stolem and this led to crash in the market. With this type of incidents occuring people become afraid to use Cryptocurrency or adopt it. When these funds are stolen they cannot be tracked.

The solution to this problem is that individuals should make use of decentralized wallets or exchanges for transacting and storing cryptocurrency asset, this because they are more secured than their centralized counter parts. Instead of a third party being responsible for your security, you become responsible for your own security.

iii. Environments Issue:

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Climate Change is a global issue and we are seeing the effects all over the world, and mining Cryptocurrency has been found to be harmful to the environment because it consumes a lot of energy to mine because of the sophisticated devices that has to be used. This has led to an explosion in group farming and increase in energy cost. This hampers the adoption of Cryptocurrency.

The best solution is to find an alternative to mining, also devices that consume less energy should be used for mining, this will bring down energy cost, reduce or carbon print and mae Cryptocurrency eco-friendly.

Pros and Cons of Cryptocurrency adoption by business owners

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i. Cryptocurrency transaction is very fast, in split seconds without any unnecessary delay transactions can be performed easily. This allows businesses to carry out a lot of transactions everyday without any limitation and this makes payment very easy.

ii. The cost of transacting in cryptocurrency is very low. When sending money using Cryptocurrency there is little or no charge at all unlike bank transfers. This helps businesses to cut down on expenses and save them some cash which they can reinvest back in the business.

iii. Transacting in cryptocurrency allows businesses to trade with customers in another country. It makes cross border payment easier because transactions can be done without going through bank process that are stressing. All thanks to P2P individuals can trade directly and anonymously.

iv. Transacting in cryptocurrency enables businesses to circumvent tax charges. This is because since cryptocurrency are not regulated they are free from government policies that apply to fiat currency. This reduces the taxes paid by business owners and lives them with more cash at hand.
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Cons

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i. Transactions made in Cryptocurrency cannot be reversed. If a buyer or seller sends crypto to the wrong address he won't be able to recover such funds and that is a big loss on his end.

ii. Businesses who put a significant amount of their net worth in Cryptocurrency may suffe huge losses due to volatility of the crypto market. When this happens such businesses may go bankrupt and won't be able to recover.

iii. Not every person or business accepts cryptocurrency as means of payment so business owners who are crypto friendly may still have to make use of fiat in the making of payment or transacting.

iv. Cryptocurrency transaction do not have the ability to handle large volume of transactions like other centralized popular systems like PayPal. This will have an effect on the number of transactions that can e carried out and thus can congest the network if may people are trying to transact at the same time.

Conclusion

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The adoption of cryptocurrency depends on volatility, usability and scalability. If we perfect this three factors with clear cut regulations on the part of the government we may actually see a global adoption of Cryptocurrency. Cryptocurrency is here to stay, there are lots of things we can change using blockchain technology, the government needs to accept this change instead of trying to crush it.