The Boom of Cryptos

bank boom cryptocurrencies

Cryptocurrencies are prospering and advancing day by day and this advancement is not something that central banks should neglect. Agreed that central banks are the guardian of tangible money, yet as times change, digital money is progressing swiftly and central banks should focus on this escalating form of currency.

A few years ago, central banks were the only pioneers in the field of currency, which was minimized by nearly $5 trillion in daily circulations. However, today things are different. With the invention of cryptocurrency and its recent upsurge, central banks are not the only ones guarding money. The progressively prevalent technology has although caught some of attention of central banks, still it is being averted by most of them. Even now central banks are not giving the due focus to digital coinage, which the latter is certainly entitled to.

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It is high time that central banks should wake up and treat cyber currencies as the serious form of currency and not just money toys. After the onset and seeing the progress of digital currency, it would not be long when central banks will just look like barbarians on the verge of existence as was at the time of inception of civilized humans.

Cryptocurrency or digital currency has many forms, such as Bitcoin, Ethereum, etc. Amidst these, bitcoin is the best-known and the largest form of digital currency currently. Nonetheless, crypto money in all is posing a threat to the traditional, established system of money and its providers, majorly central banks. This is so because cryptocurrency is getting popular day by day and more and more companies are adopting it. This is slowly circumventing the use of traditional currency and if digital money keeps on surging at this pace, it would soon overcome the former.

Role of central banks and cryptocurrency

Today, conventional money as we know relies on the state’s authority for its credibility. This authority relies with central banks, which mange the quantity or price of the currency. However, cryptocurrencies do not work like the established money system for their credibility. Instead, they depend on the presumably unhackable technology in order to assert their value.

This is why central banks should focus on cryptocurrencies now, particularly when more and more people are adopting this technology. Otherwise, it would not be a surprise when central banks soon lose their control over the supply of money.

China in the lead

So, what should central banks do in such a scenario? Apparently, they cannot beat the new technology, so rather they might join them, as the old adage goes. China is one of the first countries to understand and imply this in its fiscal system.

The People’s Bank of China has already tried its sample cryptocurrency and thus getting close to being the first chief central bank that issues digital currency. Furthermore, the European Central bank and bank of Japan have also begun a joint research project. This project is dedicated to learning the use of blockchain or the distributed ledger system, which is the underpinning technology used for crypotcurrencies.

Thus, other countries should take cues from these countries and start to learn about cryptocurrencies before it’s too late. Ignoring digital money is not the solution, rather adopting or fusing with the new technology is.

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