Cryptocurrencies are here to stay in different forms whether as floating currencies or Stablecoins- which are pegged to actual currencies or Digital coins issued by Central Banks. The rapid adoption of cryptocurrencies has also led to them being recognised as legal tender by countries like El Salvador.
There are questions on how cryptocurrencies can function like fiat currencies because of the wildly fluctuating nature of their value. However, The technological backbone on which cryptocurrencies function can be the foundation of transforming large-scale payments. An example of this can be when Hong Kong, China, Thailand and the UAE, together with the Bank for International Settlements’ Innovation Hub, carried out cross-border transactions with their central bank digital currencies, on an experimental basis. The transaction took seconds, instead of days, as with the conventional method of transferring payments via Swift. This shows that with the efficient implementation of Blockchain the nature and scale of large international transactions can be transformed.
The distributed ledger which underlies the blockchain technology is useful for supporting smart contracts which means that predetermined actions can be executed when payments are concluded on the blockchain. While the potential of this technology is huge, There are also underlying issues such as huge power consumption when compared to traditional forms of payments.
The policymakers have to come to terms with this new form of currency and dedicated awareness campaigns must be run to inform investors about the legitimate and illegitimate ways in which cryptocurrencies can be used. If the adoption of these currencies goes on unchecked it can undermine the stability of National Currencies and make it difficult for the Central Banks to implement Monetary policy effectively. The upcoming economic models will integrate Cryptocurrencies and Blockchain from the outset and it will have a definite impact on National Economies and their GDP.
Secretary General, CAII and
Chairman, SKOCH Group & SKOCH Foundation
Former National
Cyber Security Coordinator
Member of Parliament
Rajya Sabha
Member of Parliament
Lok Sabha
Independent Scholar
Chief Corporate & Public Affairs Officer
Zupee
Consulting Editor
The Economic Times
Former ED, RBI
Managing Director & Editor
SKOCH Group
Development Economist & Former Secretary, Government of India
Co-Founder
iSPIRT Foundation
Partner
Kalaari Capital & Crypto Economist
Professor, Information Systems & Dean Programmes
IIM Bangalore
Digital Payments Strategist
National Coordinator
Swadeshi Jagran Manch
Contributing Editor
India Ahead
Consulting Editor, Business Standard & Senior Adviser
Jana Small Finance Bank
Chairman of
Fintech Convergence Council (FCC)
Chairman
HDB Financial Services Ltd
Senior Fellow, SKOCH Development Foundation &
Former Banker