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Why is Crypto-Currency Not a Threat?

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Hesham Rehman, Co-Founder & CEO, BitxoxoEver since the emergence of the crypto-currency in 2009, it has often been alleged of being unsafe and a threat to the economy. However, delimited by some unreal hullabaloos, the truth is yet to come to the fore. Over the past couple of years the term crypto-currency has managed to garner enough attention, with names like Bitcoin, Litcoin, and others. becoming mainstream terms and being discussed by authorities across the globe. A crypto-currency is a digital currency that is created and managed through the use of advanced encryption techniques known as cryptography.

Defying the general perception of crypto-currency being a threat, a recent study conducted by Citi research affirms that Bitcoins along with other digital currencies, such as Litcoin, Ripple, Dogecoin, Peercoin, or Ether. should not be looked down upon as a threat to banks, conventional loan providers and credit card networks. The report suggests that these currencies could rather complement the existing services. The study also argues that Bitcoins and other digital currencies are well-found to pave ways to newer markets and reach out to new customers. It indicates that bitcoin and other digital currencies could majorly disrupt emerging markets with underdeveloped payment systems. There is not dearth of countries across the globe with low quality payment infrastructure and those countries present great opportunities for such crypto-currencies to form an open decentralized network of Bitcoin. Furthermore, the evolving fin-tech market of India and the emergence of new payment systems, the economy is well equipped for today’s commerce.

While these are broader perspectives of how crypto-currencies are not a threat to any
economy, narrowing down the discussion to its features, it has various advantages. The foremost advantage is that its fraud proof, more so, because these currencies are created digitally after solving a series of complicated math, which cannot be forged or misused, as is the case with credit cards. Drawing attention to the existing credit card payment system, where a user is required to give their credit or debit card details to a merchant for payments, it is as good as giving access to their full credit line, irrespective of the transaction amount. To give a better perspective of things, credit cards operate on a pull system, wherein stores are required to initiate payments and pull the designated amount from a buyers account. On the other hand, crypto-currencies use push mechanism that enables a crypto currency holder to send the exact amount to the merchant or the recipient with no further information. Moving onto its next feature that validates the guilt lessness of crypto-currency; it allows immediate settlement. For Example purchasing real property usually involves a number of third parties like lawyers, notary,delays and payment of fees. This can be compared to bitcoin block chain, which is like a large property right database according to experts. Bitcoin contracts can be designed and enforced to eliminate or add third party approvals, reference external facts,or be completed at a future date or time for a fraction of the expense and time required to complete traditional asset transfers.

The crypto currency is created and run by technology and will continue to evolve; however,the success of the currency at present is dependent on mass acceptance


With the internet penetrating deeper into the system by the day, there are around 2.2 billion individuals with access to internet or mobile phones. However, despite that they do not have access to traditional exchange systems. These individuals make for a great market opportunity of crypto-currencies. Adding to its advantages, the currency is also gaining grounds in foreign markets like Kenya. The country’s M-Pesa system, which is a mobile app based fin-tech service company, recently announced a bitcoin device and at least one out of three users now own a bitcoin wallet.

These are some explanations that will perhaps aid in alleviating the allegations of cryto currency being a threat. However, one must understand that everything in life has its good side and the bad side. In order to take a fitting decision one needs to weigh the good and bad thoroughly and make an informed decision. The crypto currency is created and run by technology and will continue to evolve; however, the success of the currency at present is dependent on mass acceptance.