Today, cryptocurrency (and blockchain) are the hot button topics many in the financial industry are talking about. Many of these new types of currencies have gained unsurmountable popularity over the past few years. According to The Balance, Bitcoin prices have risen by “1,318 percent compared to just 15 to 30 percent for most major equity indexes around the world.” So what is cryptocurrency? This popular trend is another way to exchange funds in the form of digital or virtual currency via blockchain. It’s no secret that cryptocurrency is having a major impact on the financial world.
Governments all over the world are responding to the rising popularity of cryptocurrency in many different ways. Some financial institutions have welcomed this new form of currency, while others aren’t so excited. A lot of the concern stems from tax evasion and capital controls. The U.S Federal Reserve thinks that there are many technical issues with cryptocurrency and that regulation is needed in order for success. In Europe, many are skeptical about this new form of digital transactions.
Cryptocurrency has done a lot to disrupt the current financial status quo; it’s challenging the dollar standard, cutting out the middleman, and simplifying the crowdfunding process. The interconnectivity of our global economy and the reliance on the United States dollar standard can have major effects if the current centralization is disrupted. It could be disrupted through trade, foreign policy, and economic sanctions. According to Forbes, “Disruptive technologies such as blockchain and cryptocurrencies are able to rewrite our day-to-day life.” Cryptocurrencies will have an impact on all of our lives, and its repercussions will be felt far past the financial industry.
Cryptocurrency is already impacting the financial world as governments and financial institutions try to navigate the regulation and stability of these virtual transactions. We will either see cryptocurrency flourish or fail as investors being to weigh the pros and cons of entering this lucrative business. Only time will tell, we will have to wait and see what the final results are.