introduction
Since their inception in 2008 and subsequent enthusiasm, media attention, delusion, reflection, and continuous innovation, digital currencies have become one of the most interesting and perhaps misunderstood phenomenon of the early 21st century.
In the aftermath of the financial crisis, the shortcomings of existing financial systems became widely criticised, leading to an unprecedented wave of interest in new ways of efficiently executing economic transactions while ensuring high levels of transparency and accountability. The popularity of cryptocurrencies and their potential for ‘disrupting’ and improving traditional financial systems have led to an ever-expanding list of media commentaries, research papers, and policy reports.
With over 2,000 in existence, cryptocurrencies have become progressively embraced by speculative investors and growing market caps, but have yet to be adopted by the wider public as a viable form of money due to practical technical challenges along with a lack of trust in issuing authorities and understanding of how to use them.
This research programme provides a more comprehensive overview of how cryptocurrency could be used for the betterment of society, how they currently function and how the general public use, understand and trust cryptocurrencies across Europe and the Americas.
THE project
The project “Cryptocurrencies and the Future of Money” provides a comprehensive overview of how cryptocurrencies currently function and how the public use, understand and trust them across the main European and American markets.
Some of the key findings of the report include:
- Modern discussions and debates about cryptocurrencies tend to confuse ‘money’ with ‘systems of payments’ or the mechanism by which transactions are processed and settled;
- Cryptocurrencies have the potential to vastly improve systems of payments if designed and implemented correctly;
- In practice, however, digital currencies are struggling to uphold their creator’s objectives, given that no existing cryptocurrency has been universally successful in fulfilling the role of ‘money’.
- New innovations (stablecoins, proof of stake, Central Bank Digital Currencies) are helping to make digital currencies more realistic candidates to replace traditional money and create benefis for users across large volumes of transactions.
The report also features a unique empirical examination of how citizens understand cryptocurrencies and trust different institutions to issue and manage money across a unique sample of eight countries, including Argentina, Brazil, France, Germany, Mexico, Spain, the UK and the US. It revealed that:
- Knowledge, use, and understanding of cryptocurrencies remains highly limited in Europe and the Americas.
- The vast majority of citizens in all countries agree that money should continue to be issued by central banks.
- While all central banks enjoy a significant trust premium when it comes to the creation and management of money, large differences exists between Latin American countries and Europe and the US.
- A vast majority of European and US citizens do not own digital currencies because they feel they are too risky and don’t perceive an advantage over the currencies they currently use. Our research suggests that countries with a stable history of monetary stability are less open to new types of money such as cryptocurrencies.
- On the other hand, citizens of Argentina, Brazil and Mexico experience lower social trust on central banks and therefore are more open to adopting new digital currencies issued by alternative institution.
- The degree of acceptability and price stability play a key role in determining preferences for holding of money, regardless of who is issuing it.Should you use cryptocurrency in your cash management? Is it just a trend or will it last? There are many similar questions that come to our mind when we think of “Crypto” as an investment avenue. Cryptocurrency is a kind of digital or virtual money that has made big changes to how money and banks work. Cryptocurrencies are not controlled by a single entity like traditional currencies are. Instead, they are built on blockchain technology and are decentralized. They let people do business without ..
Read more at:
https://economictimes.indiatimes.com/markets/cryptocurrency/cryptocurrency-in-wealth-management-a-passing-trend-or-here-to-stay/articleshow/121227547.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppstWhat are cryptocurrencies?
So called for their use of cryptography principles to mint virtual coins, cryptocurrencies are typically exchanged on decentralized computer networks between people with virtual wallets. These transactions are recorded publicly on distributed, tamper-proof ledgers known as blockchains. This open-source framework prevents coins from being duplicated and eliminates the need for a central authority such as a bank to validate transactions. Bitcoin, launched in 2009 by the pseudonymous software engineer Satoshi Nakamoto, is by far the most prominent cryptocurrency, and its market capitalization has peaked at more than $1 trillion. Numerous others, including Ethereum, the second-most popular, have proliferated in recent years.
Cryptocurrency users send funds between digital wallet addresses. These transactions are then recorded into a sequence of numbers known as a “block” and confirmed across the network. Blockchains do not record real names or physical addresses, only the transfers between digital wallets, and thus confer a degree of anonymity on users. Some cryptocurrencies, such as Monero, claim to provide additional privacy. However, if the identity of a wallet owner becomes known, their transactions can be traced.
Bitcoin “miners” earn coins by solving complex math problems to organize these blocks, thereby validating transactions on the network; the process requires a system known as “proof of work.” Many cryptocurrencies use this method, but Ethereum and some others instead use a validation mechanism known as “proof of stake.” In bitcoin’s case, a transaction block is added to the chain every ten minutes, at which point new bitcoin is awarded. (The reward decreases steadily over time.) The total supply of bitcoin is capped at twenty-one million coins, but not all cryptocurrencies have such a constraint.
The prices of bitcoin and many other cryptocurrencies vary based on global supply and demand. However, the values of some cryptocurrencies are fixed because they are backed by other assets, thus earning them the name “stablecoins.” While these coins tend to claim a peg to a traditional currency, such as $1 per coin, many such currencies were knocked from their pegs during a spate of volatility in 2022.