Although there is a direct link between economic growth and technological change, rapid technological advances over the past hundred and fifty years have made it a challenge for economists to keep pace with it. Today, a change in the shape of the currency is knocking on the door. Today, with the advent of technology, a new form of currency has come into being, which is called "Cryptocurrency". The digital currency is currently the focus of economists, and research in other authoritative international financial forums, including the IMF and the World Bank, is trying to determine whether it is appropriate for the current financial system. The question is, what is a Cryptocurrency? Cryptocurrencies or digital or virtual currencies are used for transactions and are database entries that cannot be changed unless specific terms or requirements are met. Not fulfilled
Ryder Haggard's novels are full of such adventures, in which an adventurer, who is a hero, risks his life to get gold.
Once upon a time, the currency was in the form of gold nobles, and then the expedition would go on dangerous expeditions in search of gold reserves and, if successful, would become rich overnight. Well, known author Ryder Haggard's novels are full of such adventures, in which an adventurer, who is a hero, risks his life to get gold. These stories are still of interest today and many blockbuster films have been made on them. For example, all the characters in popular movies like "Indiana Jones" and "Solomon Mines" were looking for gold to make it happy. Although gold has been replaced by currency today, behind it is also the hand of gold reserves and even today gold reserves instead of oil are the blessings of the currency. While this journey of currency is of great interest, it is also a reflection of the evolutionary stages of man. Now the role of the state in matters of currency and finance has become fundamental. That is, it is now up to the state to decide in which currency to transact, and if the state bans a currency, then the status of the largest denomination note is no more than a piece of paper.
How Cryptocurrency Works
If we look at history, we can see that with the change in the human lifestyle, the shape of currency also kept changing. At the beginning of human life, daily transactions were limited to one market and then coins and coins acted as currency. These coins were used in all kinds of transactions and their authenticity was known by scraping, chewing, or other means. However, as shipping-rich trade activities expanded and commercial markets sprang up in different parts of the world, it became difficult to move large numbers of coins from one place to another. In the ninth century AD, China introduced the paper note, and since then merchants have kept their lockers or accounts at home and their destination. A receipt note would be issued after the transaction to pay the amount. In other words, the whole business was dependent on the interdependence of the traders and the state had no involvement in it. That is why even today most economists believe that the job of the state is not to run a business but to legislate. Arab merchants called these receipts "sax", from which the word "check" came into being. Until then, however, no international currency had emerged. Later, merchants from Italy and other European countries modified the check to make it a permanent part of the global economic system.
Then when global trade began as a result of increased means of transportation, the state began to guarantee checks and notes, and the modern financial system is based on that guarantee or the state's reputation. That means billions of dollars are now transferred to banks on state guarantees. However, technology has played a greater role in making the world a global village than government policies. A few inches of plastic credit card became the guarantor of millions, billions of business. The international financial institutions have played the most important role in this regard, but the people of some countries are not even aware of this, because we present the IMF and the World Bank only as lenders and financial orders. Is done and political leaders score points on them. That is why in our country there is no debate on the role of these institutions in changing the financial system of different countries. However, at one time the developing countries of Asia, China, South Korea, Singapore, and Malaysia formulated their economic policies according to the intentions of these international organizations, and today they have become a practical model of development for us. Don't know when the time will come when we will learn from them.
The question is, what will be the future of cash? Because at the moment, in many countries, even in shopping centers and small shops, it is written: "Currency notes are not accepted here".
The world has now entered the age of digitization and the Internet has provided online services. Credit cards and debit cards are now being used instead of currency notes and it is possible to pay millions with one card. Although cash is still a tradition in our country, the same cards are also being used for transactions in developed and even developing countries, which are also called "plastic currency". As mentioned above, due to the rapid development of technology, changes are taking place very fast, so now it is common to mention cryptocurrency or digital currency. Today, a small smartphone connected to the Internet has become a commercial meeting point between individuals and organizations, and it is also being innovated daily, informing us of the advent of a new financial system. Therefore, it seems that the major economic powers are going through a period of setting new rules and boundaries. Today, smartphones have become an important source of information as well as other services, including transactions. In other words, this data has now taken the form of gold and the business depends on it. The question is, what will be the future of cash? Because at the moment, in many countries, even in shopping centers and small shops, it is written: "Currency notes are not accepted here". Also, deposits in banks are under pressure due to this new digital currency. Now, e-currency has come into existence, which has led to the emergence of modern means of transactions such as AliPay and VChat in China, PTM in India, and M-Pisa in the African country, Kenya. This currency has been created keeping in view the aspirations of consumers and traders in digital finance and modern times. Today, cryptocurrencies such as Bitcoin, Ethereum, and Ripple are eager to find their place in the market and are an important source of secure and quick payments. Experts believe that although today hackers have become a challenge to privacy and cybersecurity, it is possible to overcome them because the Internet is in the hands of governments and stable institutions and they can control it at will. That is in their interest. Today smartphones are inhabiting a new world of economics and cryptocurrency is a part of it.
Experts are hoping that the cryptocurrency will make things easier for consumers and that it will not be kept in a vault-like gold or diamond jewelry and currency notes, so there is no risk of it being stolen or looted. There will be no danger. However, the question now is what role the state will play in the cryptocurrency economy, as the currency is managed by private entities. They are the guarantors of the consumer's capital and they make transactions possible through their network. Experts argue that since these companies rely heavily on technology, there is nothing to worry about for consumers who are aware of the latest technology. However, there may be some difficulties for backward countries like Pakistan where the quality of education is declining. However, the rapid use of smartphones among the illiterate people of our country is an encouraging factor and may help in the adoption of Cryptocurrency, but even then, trust in private institutions alone is not enough. According to experts, it is important for central banks to make transactions through cryptocurrencies mandatory. Also, laws must be enacted to increase consumer confidence and guarantee it. Experts believe that although trade and commerce are a purely private sector, the population has grown so much and capital has spread so much that there is no way out without making laws.
Some experts think that central banks should issue a digital currency and this aspect has been considered in many countries, including China, Sweden, Uruguay, and Canada. Also, a paragraph on the IMF's website discusses the advantages and disadvantages of issuing digital currency through the central bank at home. In this regard, the head of the IMF, Christian Lagarde, addressing a conference in Singapore, said that she believes that the introduction of digital currency is possible and it can meet many public goals. However, before finalizing this issue, it is important to carefully consider the risks involved and consider the safety of consumers, privacy, and the stability of the financial system, otherwise disturbing results could emerge. He added that the issue was primarily a change in technology. We must welcome change, but we must also make it safe, transparent, and effective in the world of financial technology.
This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.
© 2020 Rao Muhammad Shahid Iqbal
George Xu from Philippines on October 08, 2020:
Great article here! It will be better if you could also discuss more on Bitcoin's decentralised currency as a feature of its security as well as it being a scarce resource.
Bitcoin is not controlled by any individual, organisation or government. This is what makes it unique among currencies and crypto. Financial freedom.
Furthermore, it is the scarcity [21 MBTC fixed supply] that drives up its value.