Hello everyone, hope you are all doing well. Today I am writing Hemework task in cryptoacademy which is about cryprocurrencies adoption and status in business.

Discuss the adoption of cryptocurrency in the financial market and how businesses can be boosted through cryptocurrency transactions.

Cryptocurrencies are decentralized digital assets that are secured cryptographically and run on a public ledger known as the blockchain. Following the global economic crisis of 2008, Satoshi Nakamoto founded Bitcoin in 2009. The global recession left some of the great financial institutions bankrupt and the governments couldn't help very much despite having absolute control over centralised currencies. To give financial independence to everyone, cryptocurrencies came into being in the form of BTC and then a barrage of Altcoins followed.

Cryptocurrencies are cryptographically secured decentralized digital assets. The adoption of cryptocurrencies in the financial market has its pros and cons. We know that nothing is absolute and the same holds for cryptos too. Cryptocurrencies are more than a decade old now but so far only one or two countries have legally adopted them.

Cryptocurrencies have pros and cons and so far pros have not been able to outnumber the cons. As of now, let's focus on the role of cryptocurrencies in boosting business by focussing on benefits in business :

Instantaneous transactions with minimum transaction fee

Bitcoin or other crypto transactions are almost instantaneous, which means that they reach your peer sitting anywhere in the world with the click of a button. Worth mentioning point is the small amount of transaction fee that you need to pay. But one thing that we need to be cautious about is the non-repudiable nature which means that once your transactions reach the receivers node, there is no way to get that back unless the receiver wishes to pay it back.

Undoubtedly the instantaneous nature of transactions saves our time and in business time is money. Low transaction fee is self understood benefit as business owners perform huge number emand transfer heavy amounts . Therefore , transaction fee does matter .

Global currency.

Taking the example of bitcoin as a prototype, it is a global currency. Unlike traditional currencies, there is no geographical barrier to its use. Adoption of cryptocurrencies in business would foster global ease of doing business. Moreever, the technical difficulties associated with swapping are also eased out.

Transparency

As all transactions are recorded in the form of blocks. Blocks can't be edited. These transactions are accessible to everyone. So you can see transactions of everyone making blockchain more transparent. In the traditional banking system, only banking authorities have access to customers transactions.

Other benefits would be clear in subsequent sections . To avoid repetition , i am not discussing it here.

What is your opinion on cryptocurrency being accepted globally for our day-to-day transactions.

With the boom in technology, the world is heading toward a cashless economy. Online transaction of conventional currencies through various modalities of internet banking has facilitated the adoption of cryptocurrencies in day-to-day transactions. I think the adoption of cryptocurrencies globally would be a great step forward to revolutionise the financial ecosystem. Everyone would be benefitted from its features like instant transactions, enhanced security, borderless global transactions, low transaction fee etc.

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

Volatility is the intrinsic feature of cryptocurrencies and that is the core feature which is being materialised by the traders. The other side of the story is dark too and that's the reason I support the statement that the the volatility of the cryptocurrencies is a major concern for business owners. Let me make it more clear with the help of an example:

Suppose I as a business owner sold some physical assets that I own worth 10BTC on 13/06/22 at 10:00 pm and today on 14/06/22 at 10:00 am I wish to purchase some quantity of physical assets to maintain the quantity of stock as before. With the dip in price, I will have to pay about 11.5 BTCs. So within 12 hours, I will be at a loss of 1.5 BTC. So the whole purpose of doing business is ruined.

What other factors are currently limiting the adoption of cryptocurrency and how can this be solved?

Certain features limit the adoption of cryptocurrencies in the financial market. Let's mention some major factors besides volatility. Volatility as mentioned above is also a limiting factor. Let's keep our discussion Bitcoin centric as BTC is the parent or king coin of the crypto market. So I'll discuss limitations concerning BTC.

Use in illegal transactions

We know that BTC or Altcoin transactions are anonymous which means that transaction details can't be traced back to the sender or reciever. It is the anonymous nature of cryptos that has led to its use in illegal transactions like the drug trade, money laundering, arms and ammunition sale , terror funding etc. In our country, it is this feature that is hindering the adoption of BTC or cryptos by our government.

To solve this problem, cryptos need to be brought under the radar of the government and laws to curb these illegal activities need to strengthened.

Security Issues

Bitcoins or other cryptos being decentralised have no regulatory authority. Being digital assets cryptos are vulnerable to theft by phishing, hacking and spamming by miscreants. They are so fragile as an asset that "if the password is lost, the currency is lost". However, backup mechanisms for passwords are available these days but they need to have been set beforehand.

Taxing of cryptocurrencies

It depicts one more horizon of cryptos with dual nature. As there are no taxing mechanisms for Bitcoin and Alts yet. Those who want to evade tax take advantage of it and use it as investing tool after a thorough risk-benefit analysis. And as long as governments don't find effective ways to regulate this aspect, the legal status of Bitcoin and other cryptos is going to remain suspended till then. India has passed bill to imposed heavy taxes on cryptos since July 2022. It includes 30% tax on profits and 1% Although the tax slab is too high but it is viewed in positive sense by Indians as it is a step towards legality.

High Electricity Consumption

High electricity consumption by miners is also an issue flared up by some economists and environmentalists, however, I think, had it been such a big problem, it would have affected the earnings of miners too. Not to let this issue add to existing problems and to minimize the expenditure, alternative sources of energy like geothermal, wind, solar, and hydroelectric are becoming popular nowadays. Last but not least eastern is the generation of the carbon footprint at places where electricity is extensively carbon driven. Majority of the Alts have solved this problem by shifting to other consensus algorithmus excluding proof of work which is being followed by Bitcoin.

Discuss the Pros and Cons of cryptocurrency adoption by business owners.

Pros of Cryptocurrencies adoption.

Decentralized Nature

By saying that it is a decentralised asset, we mean that there is no single authority to control it. It is based on peer to peer network. So you have total control over it. Unlike the traditional financial system, where banks have control over customer funds.

Anonymity

Decentralized nature leads to anonymity which means, unlike the traditional banking system, financial details and address is not known to anyone. Although there is a unique bitcoin address tracing it back to reach users is almost impossible. It is this unregulated and anonymous nature of the coin, which makes some people criticize it for having great potential to be used for illegal purposes.

No server down.

In traditional systems, we often face server down problems As a decentralised system is based on multiple nodes, all nodes can't be down at the same time.

Excellent Security

As cryptos are digital assets. It is not something to be drawn from ATMs that are stored in digital wallets secured with complex keys. Therefore, is very much more secure than physical currency.

Other pros have been discuss e above and they are

• Global transaction
• Instantaneous transaction
• Low transaction fee
• Non-editable and Transparency.

Cons of Cryptocurrencies.

Cons of cryptocurrencies have been mentioned above in the limitations section.

Conclusion

Cryptocurrencies form backbone of Defi and are gaining popularity at lightening speed . With certain limitations that are be addressed , cryptos are going to revolutionise the business sector. Morever, the current dip in cryptos must be viewed as an opportunity and not something to panic from.