Cryptocurrency’s rapid development stemmed from the agony of the 2008 financial crisis greatly known to many as The Great Recession in which bitcoin was offered as an alternative to the existing financial system which was already falling apart. Within a few years, a unified counterculture movement developed around cryptocurrencies, and it has continued to revolve around them.
(Vigna and Casey, 13) The common issues of virtual currencies are that it’s subject to significant fluctuation in value, holds security risk, faces the risk of rejection, and its absence of regulation entails risk for consumers. According to The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order, the wallet is “just a user application that allows you to send and receive bitcoins” and “much like an account at a traditional bank, is little more than lines of code, and because of that, online security is an issue.” (Vigna and Casey, 170) Virtual currency is a form of electronic money that is not issued by any monetary authority and holds equal monetary value, whereas conventional currency is physical money that is issued by the monetary authority. Cryptocurrency is a form of virtual currency in which encryption techniques are used to regulate chains of currency and authenticate the transfer of funds. Bitcoin is a cryptocurrency and the first decentralized currency. Virtual currencies can be classified as Centralized and Decentralized.
Centralized virtual currencies have an administrator and a central repository, whereas decentralized virtual currencies do not have either and every transaction is registered in a public ledger known as a blockchain. (Kalmadi and Dang, 10-13) Virtual currencies will become as common as conventional currencies because of its fast transaction speed, lower financial costs, promotes financial inclusion, fewer merchant risks, and lower identity risks. However, other people may say that virtual currencies will not become as common as conventional currencies because it’s subject to significant fluctuation in value, holds security risk, faces risk of rejection, and its absence of regulation involves risk for consumers. The absolute value of virtual currencies in distribution and the number of businesses or merchants utilizing them are still limited. In addition, virtual currency transactions are susceptible to terror financing risks and money laundering, thanks to payee and payer obscurity coalesced by the absence of an certified monitoring authority.
Moreover, virtual currencies face the prospect of rejection as they are yet to be accepted universally by merchants, users, governments, or regulators. Finally, there is no pivotal monitoring authority or regulation for virtual currencies, nor government or fundamental bank protection for virtual currency accounts, leaving consumers with no remedy in the event of fraud. (Kalmadi and Dang, 10-13) This is why other people may say that virtual currencies will not become as common as conventional currencies.