Crypto Currency – Is it Safe?
Crypto-currency is a digital asset that can be used as a form of electronic payment and an alternative to Fiat currency. It is generated by a process called mining and no entity or government can influence the value of the cryptocurrency, since it is born within the network, and it stays there. It works on cryptography proof that allows any two willing parties to transact directly with each other without the need for a trusted third party – whether it is State or Bank or Regulator. The important crypto currencies that are in circulation viz., Bitcoin, Ethereum, Litecoin, Zcash, Dash, Ripple, Rilcoin etc. It is a fast evolving in terms of merchant adoption and many large business houses, including Microsoft, Dell, PayPal, Dish Network, Expedia, NewEgg and TigerDirect are accepting crypto currency as mode of payment. Opportunities / Challenges: Though, it suits for cost effective cross-border money transfers, it lack intrinsic value as their value depends only on the willingness of users to accept them. There are concerns with regard to maintenance of its value, KYC compliance, taking undue advantage of the system by unscrupulous persons/agencies and lack of consumer protection. The circulation of crypto-currencies may lead to proliferation of black money, heaven for drug peddlers and source for terror funding, which are detrimental to the interest of the nations/globe. The major challenge is the integrating of crypto currency with the existing financial system where global central banks control the strings. With currency in circulation having major bearing on inflation and monetary policies, these banks are unlikely to allow digital currencies to disrupt the balance. Present Status: Globally, different regulatory approaches are emerging by recognizing virtual currencies as payment method by Canada, Switzerland and Thailand while Russia, Israeli, Japan and USA are considered to be more user-friendly with little regulatory controls. The Central Banks of Europe, China, and India expressed their concerns about the usage of the unregulated currency and imposed ban on dealing with crypto currencies. There is an imminent need to have proper control mechanism to reap the associated benefits through implementing adequate security protocols, comply with AML guidelines and ensure greater transparency with regard to reporting and disclosure requirements.
Crypto-currency is a digital asset that can be used as a form of electronic payment and an alternative to Fiat currency. It is generated by a process called mining and no entity or government can influence the value of the cryptocurrency, since it is born within the network, and it stays there. It works on cryptography proof that allows any two willing parties to transact directly with each other without the need for a trusted third party – whether it is State or Bank or Regulator. The important crypto currencies that are in circulation viz., Bitcoin, Ethereum, Litecoin, Zcash, Dash, Ripple, Rilcoin etc. It is a fast evolving in terms of merchant adoption and many large business houses, including Microsoft, Dell, PayPal, Dish Network, Expedia, NewEgg and TigerDirect are accepting crypto currency as mode of payment. Opportunities / Challenges: Though, it suits for cost effective cross-border money transfers, it lack intrinsic value as their value depends only on the willingness of users to accept them. There are concerns with regard to maintenance of its value, KYC compliance, taking undue advantage of the system by unscrupulous persons/agencies and lack of consumer protection. The circulation of crypto-currencies may lead to proliferation of black money, heaven for drug peddlers and source for terror funding, which are detrimental to the interest of the nations/globe. The major challenge is the integrating of crypto currency with the existing financial system where global central banks control the strings. With currency in circulation having major bearing on inflation and monetary policies, these banks are unlikely to allow digital currencies to disrupt the balance. Present Status: Globally, different regulatory approaches are emerging by recognizing virtual currencies as payment method by Canada, Switzerland and Thailand while Russia, Israeli, Japan and USA are considered to be more user-friendly with little regulatory controls. The Central Banks of Europe, China, and India expressed their concerns about the usage of the unregulated currency and imposed ban on dealing with crypto currencies. There is an imminent need to have proper control mechanism to reap the associated benefits through implementing adequate security protocols, comply with AML guidelines and ensure greater transparency with regard to reporting and disclosure requirements.
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