The pros and cons of digital currency
Digital currency has become much more popular over recent years. Its value and exposure have grown hugely within the public realm.
At the end of 2017, the value of a Bitcoin had exploded which made global news. This also saw a plethora of other lesser known and cheaper digital/cryptocurrencies gain attention as people sought the next cheap investment, expecting the same increase to happen.
The London Underground was plastered by adverts for companies promising to invest in the crypto market on behalf of commuters.
However, a few weeks later the value of Bitcoin plummeted and the modern day gold rush was over.
But why were people so eager to invest? Also, why did the rise in the value of something, that only exists in the digital world, make global headlines?
It may have something to do with the following Pros on digital currency.
Cryptocurrencies operate using a certain type of technology which allows it to move from one account to another seamlessly. What’s more, this can take place regardless of the amount of money involved or the location of each account.
The money is also impossible to track, which means that people can move their money from one country to the next without the threat of being looked at by governments suspiciously as anybody transferring over a certain amount from one country to another will be flagged by the banks.
Due to the fact that this is such a useful piece of technology, people have poured thousands of pounds of their real money into digital currencies in order to transfer them seamlessly.
Money laundering is one of the biggest problems when it comes to criminal activity and the fact that cash can’t be tracked online like it can be when moving money from one account to another means that criminals can keep hold of hundreds of thousands of pounds without anybody knowing about it.
However, if the UK became a cash-free society and only digital currency was used alongside crypto-currency, it would be impossible for cash to be hidden or laundered.
For example, how would drug dealers get money? They aren’t going to be carrying card readers around with them!
However, the introduction of cryptocurrencies to the mass market would have a direct knock-on effect for the criminal world.
Criminals can adapt to new tech
If criminals were able to launder their cash, as has already been proven, they often invest it into cryptocurrencies due to the fact that no authority can track or trace it.
Silk Road has been shut down, however, at its peak, hundreds of thousands pounds and dollars were traded using bitcoin. Drugs, weapons, and even assassinations were bought and sold through the dark web platform in its heyday.
Decentralisation means destabilisation
If digital cryptocurrencies were to become widely adopted globally tomorrow, there would be a worldwide meltdown due to the fact that the currencies themselves aren’t based upon anything of value except confidence. This can, after all, rise or fall based on nothing more than a piece of news.
The banks would fall and the entire structure of the global economy would be destroyed.
Effectively, digital currencies are extraordinarily useful. However, it is unlikely that they will ever replace the major global currencies until the big banks and governments find out how to control them, which would effectively end their promise of being decentralised from them anyway.
Arrange a free consultation with our team of experienced and approachable tax incentive advisors today. At Kene Partners, our mission is to help innovative companies access millions of pounds of government money set aside to foster innovation. Your business could be next.