Will Cryptocurrencies Replace Banks As The Preferred Method of Payment?

• People have always adopted different payment modes with the evolution of time.
• Recently, companies and users have expressed their thoughts on adopting cryptocurrencies as the future of payments.

The evolution of technology has always been in the direction of making things easy, yet safe for humans. The barter system was gradually replaced by cash payments, helping buyers and sellers engage in fair trade practices. However, soon people realized its limit, and other methods, mainly credit cards, came onto the scene. 

People were ready to carry a plastic card instead of huge piles of money. In the 1990s, the rise of the internet demanded that business models adapt to the online mode of payment. Users now have the comfort of purchasing items from the comfort of their homes. The trend was carried forward by enabling it on mobile phones, which helped people carry, not exaggerating, a whole bank at their fingertips. 

But because of the financial crisis and over 200 banks going bankrupt, people started to leave these central financial organizations and search for other options. Bitcoin is a form of currency that started in 2009. It is unlike regular money because it doesn’t require anyone’s help to make payments.

Although digital money was not an old concept and several researchers tried to develop it, Bitcoin owes its success to its unique concepts to eliminate double spending and provide robust security to the whole network. The launch of Bitcoin fired the gun, for more than a thousand cryptocurrencies running the marathon and looking for their adoption in the mainstream market

Cryptocurrencies: The Future Mode of Payment

The technology called blockchain, which supports cryptocurrency, allows for all transactions to be stored publicly and clearly on a record. Transactions are kept in groups called blocks, and these blocks are connected together to make a chain of blocks.

They are protected because they are encoded using special coding methods. The issue of double spending is eliminated by the use of the Proof of Work consensus mechanism, which ensures that at each time only one record of transactions is maintained and the same is available for all the nodes. 

The inherent features of blockchain make all the data (here, transactions) stored on the ledger immutable, i.e., permanent. Thus, once entered, the ledger will contain the record forever and can’t be deleted or tampered with by malicious players. 

In recent times, although not mainstream, cryptocurrencies have become a competitor for traditional modes of payment. More than a thousand cryptocurrencies handle billions of dollars in transactions daily, with total crypto users surpassing the 420 million mark. 

Being peer-to-peer, these eliminate any types of hidden charges paid to intermediaries and reduce the overall processing time as well. It is especially suited for people working abroad and sending remittances back home, quickly and cheaply. Several platforms, like Overstock, Newegg, Travella, Wirex, Nexo, CheapAir, and others, have already taken steps toward accepting crypto payments from their users. Other companies are too busy integrating their systems to make them crypto-compatible to miss out on any opportunity. 

However, the industry, like others, is not immune to some drawbacks, which have prevented it from coming into the spotlight. Two major reasons can be the underlying volatility and the lack of regulations. Crypto assets are highly volatile, and their price fluctuates frequently, scaring people away from investing in and adopting them. Proper regulations have not been drafted for the industry, strangling it in constant legal battles and lawsuits. 

Conclusion

The use of stablecoins, which maintain a constant price, can be used to conduct trades without fearing their volatility. Although cyber theft and fraud cannot be eliminated, they can be prevented by using robust models and advanced security features. Still, people have diverse thoughts regarding the future of cryptocurrencies. Some consider it the engine driving the Web3 car and unavoidable, while others debate its failure when the hype has died.