The global monetary system is on the brink of a revolution ushered by cryptocurrencies. It is estimated that over 300 million people worldwide are actively using digital coins, and 18,000 businesses are accepting crypto payments.
With the emergence of the online economy, digital transactions began to evolve. Thanks to the innovation called blockchain technology, entrepreneurs can produce cryptocurrencies that have the potential to replace fiat money and the entire monetary concept.
Although there are over 1600 various types of digital coins, few are dominating the market and are acceptable payment methods. The current flagship crypto coin is Bitcoin, with Ethereum getting wide recognition, while Cardano, Solana, and Binance Coin are gaining global traction.
The Global Reach of Crypto
Digital currencies created by encryption algorithms prevent counterfeiting, and some economists claim that cryptos are inflation-proof. “Cryptocurrencies will likely become an alternative to cash in the future. According to the numbers, currently, the value of crypto amounts to about 1.5 trillion US dollars,” claim the experts at arabfinancials.org.
Digital coins are used in over 154 countries, but to a varying degree. As reported by the US survey “Economic Well-Being of U.S. Households in 2021”, 12% of the population had some crypto experience in that year. However, the sobering fact is that only 3% of Americans use it for payments. Most of the nearly 40 million Americans that possess digital coins see them as a solid investment. However, the picture is very different in other corners of the planet.
The developing world is embracing cryptocurrency at an increased speed. Nigeria is a case in point – one in three Nigerians have used crypto for online purchases. This means that about 33% of the country’s population uses digital coins. Percentage-wise the number makes the African nation the world’s leading country in acceptance of crypto. Vietnam is second, with 21% of its population working with cryptocurrencies. The Philippines are third with 20%, Turkey and Peru are tied at 16%, and at 11%, Switzerland is the only developed country, where over 10% of the population actively transacts with crypto.
This data indicates that cryptocurrencies are widespread, but the patterns of using them are different. In poorer nations, where there isn’t much trust in the local currency, the population is massively pivoting towards digital coins as a safe payment method. On the other hand, more prosperous nations see digital coins solely as an investment asset.
Bitcoin Dominates the Crypto Scene
It is hard to beat an original product, and Bitcoin proves that idea correct. The digital coin that sparked the blockchain revolution was inaugurated in 2009 and is still the brand name most people identify concerning the crypto concept. There are around 170 million people with active Bitcoin wallets and an average of 270,000 verified daily transactions.
Several blockchain networks are vying for power, some offering better solutions than the Bitcoin concept. Yet several factors still play in Bitcoin’s favor. Current expectations are that the mining of Bitcoin will cap at 21 million coins, so experts believe this limited supply will contribute to the long-term stability of the cryptocurrency. Coupled with its brand recognition, it is no wonder that this coin is believed to remain at the top of the crypto pyramid.
Financial Applications of Cryptocurrencies
The general perception is that cryptocurrencies are high-risk investments for Silicon Valley entrepreneurs. Although there is some truth in that, the fact is that decentralized digital currencies have numerous applications.
Because of the growth of the cryptocurrency ecosystem in the past decade, it is possible to book hotels and flights with crypto and make purchases of cars or IT equipment.
Even though cryptos gets used for online purchases, the preferred application is for wealth storage. It makes for a censorship-resistant alternative because authorities cannot freeze crypto wallets.
One of the well-known uses of cryptocurrency is sending and receiving payments fast and at low expense. Moreover, people who value anonymity use privacy-centric digital currencies.
Finally, the most frequent usage of cryptos is as a trading asset. Bitcoin investors, for example, use the asset’s volatility and profit from price fluctuations.
The Crypto Future
The crypto industry is still not regulated around the globe, so this makes many hesitant about accepting any cryptocurrency as a standard payment method. Regulation will bring stability, so there is a wave of initiatives for legislation that will provide a framework for integrating crypto into the financial sphere.
“The percentage of risks involved in using encrypted digital currencies comes from the presence of the human element or unregulated international operations, and this is exactly what is the reason for its decline in value or its rise dramatically,” say crypto experts at arabfinancials.org.
Cryptocurrencies are being used more frequently across the globe, with new applications for their use constantly emerging. While financial institutions and governments are still trying to come to grips with this innovative technology, it is clear that cryptocurrencies are here to stay. What will the future hold for this exciting field? Only time will tell.