How Crypto is Shaping the Future of Banking & Finance

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How Crypto is Shaping the Future of Banking & Finance

Currency is the backbone of all financial trades since time olden. Whether you opt to pay with cash, swipe your card, or make use of any other digital mode of payment, every transaction makes use of currency.

The earliest settlers used the barter system to fulfill their daily needs, which was eventually thrown over by the introduction of the first-ever form of a common currency- metal rings used by Egyptians (2500 BC). But, soon this mode was also replaced by the first-ever noted use of coins in a region where modern-day Turkey is, around 700 BC; followed by the minting of paper notes (around AD 618 to 907) by Tang Dynasty.

But, with rapidly pacing globalization of world economies, bankers and innovators promptly received the first-ever digital currency– ecash (developed by American Cryptographer in the year 1983). This mode was, although, decentralized but posed security issues. The struggle with currency was on-going, when out of blues, an anonymous person, known by the name of Satoshi Nakamoto, launched the first successful decentralized cryptocurrency- Bitcoin.

What is Crypto?

In the simplest possible terms, a CryptoCurrency is a digital form of currency that uses Blockchain technology and a secret code to confirm deals. Thus the name ‘Cryptocurrency’. Bitcoin, Ethereum, Litecoin are a few examples of commonly used cryptocurrencies. However, there are over 1500 registered cryptocurrencies to date.

What is Necessary to Trade in Crypto?

Since its inception, trading in cryptocurrency has been enduring steady growth. However, the highly volatile nature of Bitcoin and other cryptocurrencies has been a great concern for bankers and investors.

Nevertheless, there are a few trading codes and conducts that can ensure safe crypto trading. For instance, investors require a broker or a trader for carrying out the exchange of currencies. Now, it depends upon the owner of the cryptocurrency, when and in exchange of what other currency they wish to trade. Usually, a trader would charge a commission per the value of trade requested. Besides, crypto trading requires a careful study of the market trends and a secure wallet to gain the maximum profits, as opined by experts from Relayed.co, also adding that ease of transaction is a must. Notably, there are now highly sophisticated technologies backing these trading exchanges and brokers to simplify the process for their customers (you).

So, if you’ve made up your mind to start trading in bitcoin, or any other cryptocurrency, you may also need to learn how crypto-trading works.

What goes on during a crypto-trade?

In a much similar way to currency exchange, or FOREX, crypto trading is also carried out in exchange for either other cryptocurrencies or fiat currency. However, unlike the fiat currency trades, crypto prices are prone to high fluctuations in exchange value, owing to its highly volatile nature.

Newcomers usually prefer short-term trading, before gaining expertise in analyzing the market trends and predicting the appropriate sale and purchase moments. Short-term trading involves holding the currency for a shorter period, ranging from a few minutes to a few months. On the other hand, seasoned traders prefer holding on to their assets for longer, usually up to a year.

The world populace has been scrutinizing the crypto universe, and by far the perception is a mix of positive and negative reviews. Although the leading powers of the world have legally supported the crypto trading, there’s still a long way for cryptocurrencies to be a part of routine economic activities.

What More Could be Done to Alleviate Crypto-Sense?

By far, European and American countries have legalized only trading, and in some areas, using cryptocurrencies as a tender for making economic deals. For the global acceptance of the currency, there are still many ways that need upkeep.

Investments in Infrastructure

Since cryptocurrencies are not developed or regulated by government agencies, meaning they are largely decentralized, there is an urgent need for better infrastructure. While some countries are promoting Blockchain startups and cryptocurrencies by framing mild policies, there is a critical need for more investments. Such grants can promote more mining and thereby more trading, resulting in more revenue generation from every economic activity, surrounding the cryptocurrency.

Levying Indirect Taxes on Trades

By far, most of the countries that have legalized the trading of cryptocurrencies are levying direct taxes on the transactions. Typically, levying taxes on property, since most of the agencies consider these digital currencies as assets. As and when the government agencies would start levying indirect taxes such as GST, or VAT, it would strengthen the currency. Besides, this could also stabilize the market, meaning reduced frequent fluctuations.

Educating Traders & Banks for Safer Activities

Most important of all, is the awareness regarding these assets, the laws surrounding them and the safer practices involved in crypto trading that can prove its stronghold on fiat currency. Educated investors and bankers can make better decisions and practice a beneficial trade that can give a necessary boost to the global economy. Additionally, the crypto market is surely a risky place, and unobservant methods can endanger the world balance.

What’s Expected of the Crypto Universe in the Near Future?

No later than sooner, the world economy would surely witness the shift from the current form of transaction to a new one. Evidently, from the current trends, the shift has already begun, by changing from cash transactions using bills and coins, to digital modes of payments such as card payments, or online transactions. In fact, there are stores across some countries that accept cryptocurrencies as a mode for making a purchase. Apart from this, some ATMs allow the user to withdraw their bitcoins!

Anticipated is the day, when global transactions would be made using these digital currencies, instead of the currently used fiat currency. This would not only boost the world economy but also set a common standard for selling and buying activities. And with all in place, the banks, and leading financial institutions are going to be on the top of crypto trading, driving the world economy.

In the end, it all boils down to the acceptance of any currency. If the Bitcoins are highly appreciated by enthusiasts and critics, alike, the only possible outcome is it’s soon going to overtake the fiat trades.

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