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2022: How Relevant Are Cryptocurrencies

05 July 2022

2022 has been a bumpy ride for the Crypto Market. Cryptocurrencies are purported to be independent of external market factors, but the current trends have shown otherwise. In the first two weeks of April 2022, leading Cryptocurrencies; Bitcoin and Ethereum plunged sharply in their price actions, with altcoins following their trail. Analysts have attributed this to factors like inflation, Taxation and Federal Reserve policy. Calling the attention of Investors who view cryptocurrencies as a better investment alternative in times of market turbulence to tread with caution.

Moreso, In the wake of the increasing public awareness in the use and acceptance of Crypto, the call for implementing regulatory measures has heightened, with U.S. Govt. and lawmakers showing particular interest in the regulation of stable coins. Unlike fiat currencies, the decentralized nature of Digital currencies has its drawback, and Crypto enthusiasts have considered that regulatory guidance can help in protecting the interests of investors. Lately, there have also been more conversations on the environmental impact of crypto, with focus on its carbon footprint. Whilst there are ongoing debates about the crypto industry, one mustn't lose sight of the huge positives that it has brought. This industry has heralded the dawn of a new digital economy.

Banking the Unbanked

Built on the Blockchain with decentralization at its core, Decentralization is not a new concept, it refers to a transfer of control and power from a central entity. According to reports, about 1.7 billion people out of the world's populace do not have access to banks. Interestingly, a large number of this populace have access to the internet. With the advent of Decentralized Finance (DeFi), new and efficient financial products and services are being built with cryptocurrencies. Users from different nations now have access to different DeFi protocols, facilitating financial inclusion in the process.

Remittances and Cross-Border Payments

Digital currencies have facilitated Cross-border payments and remittances without restrictions and at a reduced cost. This has fostered a global digital economy, where users from different parts of the world can send and receive payments. Today, there exist cryptocurrency exchanges that provide remittance services from America and Europe to African nations. With Cryptocurrencies, citizens of third world nations now have access to financial services and cross-border trades with developed nations, creating economic equality in the process.

Cost-effective means of Transactions.

A typical feature of the traditional financial system is that transactions are time-consuming and costly, especially when it comes to cross-border payments and remittances. However, With crypto payments , the transaction fees paid by a user is reduced to a negligible amount. This is possible because crypto transactions are tamper-proof, hence the need for a third party is eliminated. A typical example are payments made through payment providers like VISA or PayPal, because payment processing fees have been removed.

There's a lot of fear and uncertainty in the crypto market at this time. A historical moment in crypto, In the wake of Terra's crash, one of the most prominent ecosystems in crypto crashed hard, wiping the $40 billion market cap of its native token, Luna. Never in the history of crypto has a project this big crashed. Many have called it a "clever manipulation of some sort". But looking ahead, the future's still bright! There is room for growth, and cryptocurrencies could prove to be one of the best things humanity has ever seen!