The rise of digital currency and a world of electronic money
In a digital world of echo chambers and binary thinking, digital currencies and electronic money are more diverse topics that polarize public opinion. Despite calls for a crypto ban and over 400 bitcoin obituaries written since 2012, the rise of digital assets continues to accelerate as interest rates offered by traditional financial institutions continue. to decline at an alarming rate.
With 1.7 billion citizens worldwide without access to a bank account and nearly a billion women without access to any financial services, perhaps it is time to take a different approach. COVID has previously been accused of killing money, with many consumers replacing notes and coins with frictionless payments as contactless convenience becomes the norm.
Emerging markets and low income countries
When professionals working abroad attempt to send money to their families in Africa, they quickly run into transaction fees of up to 15%. Additionally, as users explore new digital solutions, the World Bank predicts the decline of traditional remittances. A good example is UK-based crypto firm Luno, which recently reported that 4.7 million of its 7 million customers are in Africa. But, compared to 2020, adoption in Africa has doubled to 2.3 million users, proving that momentum is building quickly.
Africa’s appetite for digital currencies is just one of many stories of how digital currency is increasingly seen as a way to make payments more accessible, faster and cheaper than traditional finance. For example, if a worker in the United States could see their paycheck put into a digital wallet allowing them to immediately send money to loved ones in the Philippines for just 2%, it would make a huge difference. The World Bank estimates that collectively, stories like this could generate a $ 16 billion boost in remittances sent to low-income countries.
An e-money race is unfolding around the world with testing of China’s digital yuan underway and the United States is starting to explore what a digital dollar might look like. The European Central Bank (ECB) has also launched a pilot project to create a digital euro as electronic payments and cryptocurrencies continue to gain popularity. However, the introduction of digital national currencies is a few years away, and we can expect them to complement cash rather than replace it. For starters, at least.
DeFi staking vs backup
Banks have been the gatekeepers of financial services for as long as we can all remember, and avoiding their services is nearly impossible in developed economies. However, many believe that blockchain and cryptocurrencies could eliminate middlemen such as bankers and provide a fairer system for all.
The one-sided relationship is increasingly criticized, with interest rates falling as low as 0.5%. Faced with the loss of their savings, tech savvy savers are exploring alternative investments and DeFi staking is gaining popularity.
Early adopters reject low interest rates and choose to stake their funds on DeFi protocols which can offer around 7% per year and up to 80% APY on DeFi staking DApps such as YeFi. Like traditional staking, investors hold a number of tokens to generate passive income, making them more accessible to new users of digital currencies. There are currently billions of dollars in assets staked on a growing number of DeFi platforms. But, in the absence of widespread adoption of DeFi projects, it will still be too risky for traditional investors who will also have concerns about securing their accounts from hackers.
However, those who do their research find that DeFi staking offers much better returns and a passive income stream. A new movement of investors and developers passionate about advancing DeFi and crypto will never revert to a traditional 0.5% savings account. Whether or when the general public will join in this new way of thinking, the debate will still be on. But we can expect DeFi to eat away at traditional finance, one bite at a time.
NFTs are spreading
As children prepare to return to school after their summer vacation, many will be asked the famous question “what did you do during the school vacation?” 12-year-old Benyamin Ahmed from London already got the best answer after making around £ 290,000 creating a series of pixel art called Weird Whales and selling non-fungible tokens (NFTs).
The concept of buying something that isn’t there has divided the online community, with many dismissing them as a digital version of the popular tale “The Emperor’s New Clothes”. But when Visa (NYSE 🙂 entered the world of NFT by purchasing a non-fungible CryptoPunk token for almost 50 ETH ($ 160,000), many wondered if the future was non-fungible?
Over the past 60 years, Visa has built a collection of historic business artifacts – from the first paper credit cards to the zip-zap machine. Today, as we enter a new era of NFT commerce, Visa welcomes CryptoPunk # 7610 to our collection. https://t.co/XoPFfwxUiu
– VisaNews (@VisaNews) August 23, 2021
Initially, we can expect emerging markets and low-income countries to drive these much-needed changes after being left out of mainstream finance. Replacing a fragmented financial landscape with something more integrated that bridges the digital divide can only be a good thing.
The Achilles heel of digital and electronic money is its problem with the Old West image and the need for more regulation. It is also questioned whether a world of digital euros and dollars will offer users the same kind of anonymity as cash. We can expect a lot of debates on the road ahead about the differences between privacy and anonymity. But make no mistake, it will be digital currencies, NFTs, and DeFi that will continue to dominate conversations in an ever-changing financial landscape.
This article was written by Neil C. Hughes
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