The social impact of cryptocurrencies is no longer questionable. Digital coins like Bitcoin, Ethereum, and USD Tether have become common in providing fast and secure transactions. But despite these massive strides, questions still linger regarding the future of cryptocurrencies in a cashless society where credit/debit cards and e-wallets dominate. This article takes a closer look at the prospects of cryptos in facilitating cashless payments. Keep reading!
The Rise of Central Bank Digital Currency
A recent report by the Bank of International Settlements says that 94% of central banks are toying with the idea of creating a central bank digital currency (CBDC). The bank concluded this after interviewing 80+ central banks. The study also revealed that over a third of these banks are already running pilot projects. This is the clearest indicator yet that cryptos are in for broader adoption in the future.
Some countries already have retail CBDCs. An example is Sweden. In May 2024, Riksbank announced plans to launch e-krona as a digital alternative to the country’s cash payments. Just like Krona, this would be state-regulated money. A few miles away, the Bank of England and Treasury may soon release “Britcoin.” Global CBDCs could soon be a reality.
The Game-Changing Bitcoin ETF Approval
In January 2024, the US securities regulator (SEC) approved the first US-listed ETF (exchange traded fund) to track Bitcoin. Most crypto industry experts interpret this move as a vote of confidence for the world’s most valuable digital coin and the crypto market. The regulator approved 11 ETFs for BTC, opening the door for new investors to come in.
Here’s the thing – the broad use of BTC ETFs is sure to drive up demand for this cryptocurrency. Experts say Bitcoin ETFs can draw up to $100 billion in 2024 alone. Some also believe that ETFs can stabilize the crypto prices by widening their adaptation worldwide. And guess what? The financial regulator also approved Ethereum ETFs in May 2024. More could be on the way.
Borderless Payments and Decentralized Finance
Traditional payment methods and banking rails are no longer suitable for our digitally connected world. Money must pass through several banking systems and intermediaries to send payments abroad. In return, this often comes with additional costs and transaction times. That’s without mentioning those annoying currency conversion charges.
Meanwhile, cryptocurrencies provide viable alternatives to cross-border payments. These DeFi systems are unregulated by central banks, making them ideal for daily activities like online shopping and gaming. Today, you can use cryptos to purchase coins at dozens of new sweepstakes casinos in the US and internationally. Some popular shopping sites now also accept crypto payments, which further indicates a more inclusive and borderless digital economy.
Financial Inclusivity and Accessibility
Many of us use credit/debit cards and phone-based payment apps to transact without touching cash. But you’ll be surprised that a number of people still live in the old ways of transacting cash. Below are some statistics to prove this:
• The Federal Reserve study says 13 million people in the US are unbanked.
• Word Bank says that 24% of the global population (1.5 billion) are unbanked.
• 64% of the total population in Egypt is unbanked.
• In Romania, 78% of the population prefers cash transactions.
There are several reasons attributed to these worrying numbers. Some may include costly bank charges, illiteracy, and slow payments. This means cryptocurrencies have tremendous potential to address the “financial exclusion” problem. You don’t need to provide bank details to use these coins, which is a significant plus.
In 2018, Qureshi and Xiong conducted a study that revealed the correlation between Bitcoin and financial inclusion. This study collected data from several sources, including the World Bank. It concluded that countries with higher Bitcoin adoption have higher financial inclusion levels. Of course, this relationship is stronger in developed countries.
Bitcoin Halving
Bitcoin halving is among the most anticipated trends in the cryptocurrency market. As the name hints, this recurring event reduces BTC mining rewards by 50%. The last mining event happened on April 19, 2024. During this event, the reward was reduced to 3.125 BTC. So, why is this practice critical in the future of BTC?
This process counters any inflation in BTC value. By lowering the reward for mining this currency, BTC becomes more scarce and valuable. Increased cryptocurrency demand is a good thing for investors and consumers alike. The next mining will happen in 2028, when the prize will reduce to 1.56 BTC. Cryptos can only get more valuable from then on.
Final Thoughts
Looking into the future, it’s evident that cryptocurrencies will play a central role in reshaping the financial landscape. Digital coins are more efficient and cost-effective financial instruments compared to traditional options. However, these coins must shake off challenges like regulatory uncertainty and limited public awareness. The future couldn’t be brighter for crypto transactions.
