Crypto Academy Contest / S2W2- Cryptocurrency Adoption by @srrebullient
Hello everyone, I am glad to be taking part in the second week of season two SteemitCryptoAcademy engagement contest.
This week's contest which is titled "How Cryptocurrency adoption" is aimed at allowing us to explain the various ways in which cryptocurrency adoption can be of benefit to various institutions and as well as its disadvantages.
Cryptocurrency came into existence through the creation of Bitcoin during the period regarded as the great recession in 2008 and the official launch of its blockchain in January 2009 by an anonymous person or group referred to as Satoshi Nakamoto. During its early stages, its adoption rate has gradually been on the rise but following the emergence of other cryptocurrencies, the adoption rate has so far grown thus allowing cryptocurrencies to see over 100% adoption rate yearly.
This increase in adoption rate which has also clearly affected the prices positively has seen a lot of skeptics turning to forerunners of the decentralized digital currency and if things should continue this way, there would be over 1 billion cryptocurrency users by the year 2024.
The financial market can be defined as a marketplace or system that allows buyers and sellers the opportunity to trade their financial assets such as stock, bonds, commodities, cryptocurrencies, fiat, etc. It can simply be regarded as a place where financial holdings are exchanged.
Just like every other market, the financial market is made up of buyers and sellers who are in a constant thug of war with buyers seeking to buy at a lower price while sellers seek to sell at a higher price.
The activities of these buyers and sellers are what drive the market as the market tends to move upwards when buyers are winning the thug fight whereas it moves downward once the sellers take the upper hand.
The financial markets such as the currency market play a major role in the economy as the value of these currencies are what determines the economic value of the respective countries they represent. This is what brought about the great recession in 2008 following the devaluation of the US dollar thus making investors look for safe havens in other financial assets such as gold, bonds, and commodities.
Seeing that these other financial assets are also governed in one way or the other, led to the creation of a more decentralized currency that will serve as a more secure alternative for financial investment.
Cryptocurrency adoption in the financial market has grown primarily due to its level of decentralization which makes it immune to government misuse and unhealthy regulations. This is clearly seen in its market capitalization which has risen from 0 in 2008 to its current value of $967,750,047,349 in 2022.
Bitcoin which is the leading cryptocurrency has given the highest percentage return in the last 10 years when compared to stocks and commodities.
The adoption of cryptocurrencies isn't based on individuals who look for means to get a return on their invested capital but has also grown among businesses and well-known companies.
The cryptocurrency adoption by businesses has been a lot result of some factors which include;
🔸Borderless transactions.
Cryptocurrency transactions know no borders and that makes it a good transaction currency for big businesses who tend to provide services across every part of the world.
🔸Transaction speed
Cryptocurrency transaction is by far faster than conventional currency transaction due to the lack of involvement of a third party. This makes it good for businesses because it will help to increase their efficiency in transactions.
🔸Attract private investors
Most investors like to maintain total privacy when investing in businesses and this aim is always defeated while making investments using conventional currencies because there's always a third-party involved. But with the adoption of cryptocurrency, such investors will gladly come in with no fear of their activities being reviewed by a third party.
🔸Task aviation
Businesses can aviate tasks using cryptocurrencies and this is due to the lack of cryptocurrency regulations by the government. This task aviation will help businesses in making more profits as transactions made using cryptocurrencies cannot be traced and what can't be traced can't be tasked.
The global acceptance of cryptocurrencies for day-to-day transactions will add a great improvement in the financial realm the reason being that cryptocurrencies allow a person-to-person transaction thus minimizing transaction cost and delay which is one of the major challenges facing the conventional currencies.
It will also allow users to get the total value of their money because one who makes purchases using cryptocurrency tends to get a full return of the amount spent without any additional charges.
Using cryptocurrency for our day-to-day transactions will also make it easier for most countries with devalued currency to adopt cryptocurrency as their national currency in other to avoid inflation which isn't possible with cryptocurrencies due to their fixed supply.
High volatility is one of the major issues with cryptocurrency and there's no doubt that it is indeed a thing of concern for business owners.
Asset volatility comes as a result of the rapid buying and selling of an asset which thus creates Instability in the price of the given asset.
High volatility is common with cryptocurrencies because most users still see them as an investment opportunity rather than a store of value. This issue creates distrust in various business owners who wouldn't want to gamble with their business because, in as much as cryptocurrencies can yield massive gain, they can also yield unbearable loss which is a chance most businesses wouldn't want to take.
In addition to the volatile nature of cryptocurrencies, there are other factors that are currently limiting the adoption of the decentralized digital currency and they include;
- Fear of uncertainty
The fear of uncertainty is another issue limiting the adoption of cryptocurrencies because potential investors tend to get skeptical about whether cryptocurrencies are indeed safe as they claim to be. The fear of uncertainty has greatly increased following what happened to Luna and its sister stable coin UST and this will further limit the general cryptocurrency adoption.
- Governornment policy
Government rules are also against cryptocurrency adoption because they believe that the wide adoption of cryptocurrencies will see to a lack of payment of tasks as cryptocurrencies transactions cannot be monitored by various task bodies. An example is seen in the law made by the Chinese government in other to prevent cryptocurrency mining and use in the country. Also, a similar policy was made by the Nigerian government which saw an end to banks performing any crypto-related transactions.
- Environmental concerns
Environmental concerns are another issue limiting cryptocurrency adoption and this is majorly due to Bitcoin mining. Mining Bitcoin requires sophisticated technologies which demand a massive power supply. This type of energy supply cannot be given by mere electricity and thus leading to an alternative source of power which are harmful to the environment. Currently, about 40 million pounds of carbon are emitted as a result of Bitcoin mining.
There are several advantages as well as disadvantages of cryptocurrency which has led to some businesses adopting it while some are still reluctant.
- PROS
✅Cryptocurrency is very fast and has no limit whatsoever. This will hasten business transactions, especially the ones that involve huge amounts because it wouldn't have to pass through a series of confirmations by the third party.
✅Cryptocurrency adoption will help businesses to circumvent tasks thus allowing them to make more returns on their sales.
✅Cryptocurrency allows P2P transactions and that will encourage business transactions among individuals in different countries of the world.
✅Transaction cost is low compared to conventional currencies and this is a result of the lack of involvement of an intermediary. This will encourage business owners and customers alike.
- CONS
✅The volatile nature of cryptocurrencies can lead businesses into accumulating unbearable losses. This discourages a lot of businesses from adopting cryptocurrency.
✅Decentralization of cryptocurrencies made it that lost funds can't be recovered and that makes any transaction mistake very costly and not what most businesses would like to bear.
✅Big businesses have a lot of individuals involved who handle various activities such as service distribution and transactions. Assuming a business fully adopts cryptocurrency, this will certainly lead to multiple persons performing transactions on behalf of the business company, and in cases of stolen funds, there will be no way of identifying the exact culprit.
In summary,
Cryptocurrency adoption is something we should gladly anticipate and wait for will happen. But as much as this adoption will be about more efficiency in business, there are still some cons that should be addressed in others for cryptocurrency adoption to increase.
Yes! I agree. This is one of the advantages of cryptocurrencies... Although, you still mentioned that business may incur losses due to the nature of cryptocurrencies. However, I think this can be solved by using stable coins.
Thank you for sharing with us..
You have said well. The issue of volatility can be solved using stablecoins. But the method of pegging of most stable coins is not completely decentralized and the few decentralized ones are often experiencimg Instability in price. A good example is UST which lost its peg and we are currently hearing of USDD losing its peg too due to the current significant dump in the cryptocurrency market
This is a disadvantage to cryptocurrency hence the need to be careful and check when transacting if transferred in the wrong wallet or a different networks address, it cannot be recovered regardless of the amount you are transacting
Clearly it is a disadvantage and I believe that most of cryptocurrency users must have been hurt by it in one or two accasions.
Yeah it is
You are right when you said the cryptocurrency is very fast and has no limit. Seriously Reading through your article I most say you have done your research so well about the crytocurrency. Keep it up and I wish you all the best.
Thank you so much for your warm comment. I really appreciate your encouraging words.
Thank you
You are welcome 😊
Fear is one of the volatility emotions we have to learn to control because it's the main cause of many situations like this one. Honestly we have to be careful by investing on crypto.
You are right. Fear most times often leads to hasty decision making which in turn leads to price volatility because when users are afraid, they tend to sell thus creating more price Instability.
Thank you for your comment.
What does that mean ? I couldn't understand ..Kindly enlighten further. I took it as tax evasion.
Thanks
You have written so cordinatedly. I love how you started by defining the financial market.
I agree with you that government policies greatly affects the adoption of cryptocurrency in the financial market. Many country governments policies are not made to favour the use of cryptocurrency because to them it is fake and can ruin the financial structure of their country.
Good content you have here.
All the best.
Thank you so much
You are welcome.
I like how you presented all the points in a convincing manner @srrebullient
In fact, I think, if cryptocurrency is accepted globally. Then it will be much easier for the users. Because it is very nice to be able to transact in pear to pear system and the cost is very low.
At the moment, borderless transaction remains the greatest strength of cryptocurrency as the current market condition wont make it a favourable place to invest .
Check out the post I wrote on the adoption of crypto and please drop your opinion on it by clicking here