- Rise and fall of Libra
- International turmoil caused by the digital currency race
- Advantages of digital currencies
On June 18, 2019, Facebook announced their digital currency called Libra. This information electrified public opinion, triggering polarised reactions. The authorities, already suspicious of Facebook after its previous mishandling, protested the idea of Libra development. They were concerned with the lack of clear regulations, as well as possible loopholes for criminal exploitation.
Libra wasn’t greenlighted. On July 15, 2019 Facebook announced that the currency will not launch until all concerns have been met, and that Libra receives final approval.
The rise and (quick) fall of Libra caused a stir; just a few days after the initial announcement, the representative of the People’s Bank of China suggested that they would hasten the development of its own digital currency.
The international cryptocurrency race has officially begun. Let’s find out more about its possible consequences.
Potential risks of digital currencies
Once the development of Libra was announced, doubts began to arise. Is it really safe to use digital currency? Should we entrust our money to the company that has already let us down on data privacy?
The doubts were not only based on Facebook’s lack of credibility but also concerns about security. Without strict laws regulating digital currency circulation, and given the lack of oversight, there’s potential for exploitation. Possible loopholes can open the door to money laundering and other financial fraud.
Without a clear structure for regulation, there’s also a risk that Libra could undermine sovereign currencies.
Moreover, the international digital currency race is likely to have global consequences. War for economic domination between America and China has exacerbated even more after the announcement of American cryptocurrency.
Some countries see the possibility of digital currency development as a threat: there’s a risk of enhancing the strongest players’ power over the global financial system.
In order to reduce the risk of harsh consequences of hasty decisions, digital currencies should be handled cautiously, and their development should be subject to strict regulations.
Benefits of digital currencies for businesses
Despite international confusion and turmoil triggered by this subject, businesses can actually benefit from the introduction of digital currencies.
Properly regulated, cryptocurrencies can improve money circulation and facilitate transactions.
Lower transaction fees
Comparing cryptocurrencies to the most popular payment methods, you will observe that transaction fees are significantly lower in the first case. The same applies to using credit cards; in comparison to digital currencies, it’s simply unprofitable. The biggest difference can be seen in the case of international payments.
The differences between fees are big even in the case of smaller transactions and make a bigger difference as the value of transaction increases. There’s no point in wasting your many on unnecessary fees, you can use your savings to support your company’s improvement.
Faster receipt of funds
International transactions generate higher fees but it’s only the tip of the iceberg. One of the biggest drawbacks of traditional methods of payment is that it takes days or weeks to get your money. Are you tired of waiting for your funds to appear on your company account? One sympathises.
Processing of digital currency transactions is usually completed within a few minutes, although it can increase due to the expected growth in the use of cryptocurrencies. However, it is still a great deal faster than regular transactions; it’s akin to comparing sending an e-mail with sending a letter.
Using cash/ card solutions, you entrust your bank with your personal data. Without hesitation, you reveal your personal information such as your name and address. In the age of data supremacy, revealing your information to an unknown party can be very dangerous.
This risk doesn’t apply to digital currency transactions. By trading with cryptocurrencies, you won’t have to reveal any of your information, and it will protect you from possible dangers, such as identity theft.
Managed well, and properly regulated, digital currencies can significantly facilitate and improve the flow of money and bring many benefits to businesses.
Hopefully, using digital currency for political purposes won’t undermine its advantages.