Article written by Lucy Priestman
Cryptocurrencies reflect one of the most recent trends in the banking sector, with Bitcoin having been seen to be one of the most popular types of digital currencies following its introduction in 2009. This apparently popularity is likely because of the unique characteristics digital curries have. Most notably, is the individual codes stored within each coin. Without these codes, the currency would have no value.
Bitcoin (BTC) can be used to purchase a variety of goods and services. However, purchasing such things with this particular type of cryptocurrency has proven to be difficult because very few retailers recognise Bitcoin as a valid currency. This further speaks to the overall value of this particular digital currency.
To ensure a high levels of security are maintained, creators have ensured that each individual payment is recorded In blockchain – a list available to the public concerning previous records of all transactions. It is thought that the creation of this list will help to maintain security, and it will likely prevent fraudulent activity, as each transaction and individual bitcoin balance will be publicly available. In addition to this, as increasingly popular as Bitcoin has become, it has suffered a decline at a rate of 6% in 2019 thus far. It is thought that the reason for this decline is because of illegal digital transfers of various cryptocurrencies within Asia. However, in addressing such illegal transfers, the People’s Bank of China has suggested that it will not tolerate such conduct and stated that it will take action to resolve any issues that appear to arise.
Facebook’s announcement to launch their own cryptocurrency (Libra) is intended to be implemented by 2020. This particular digital currency will enable Facebook users to purchase various items through the social media company, therefore enhancing their experience with Facebook, though Instagram, WhatsApp and Messenger. One of the main reasons that this currency will be launched is because the company believe that it will connect millions more people around the world on social media, especially those individuals who may not yet have their own personal banking. However, the digital currency has evoked varied responses from the public. The first and most controversial viewpoint is that in order for Libra to be rolled out successfully, there must be appropriate regulatory measures in place to manage the digital currency and to deter fraudulent activity.
Further to Facebook’s announcement to implement Libra on a global scale, the European Union has reportedly been considering launching its very own cryptocurrency, that will eventually be able to be used in all European Countries.
However, currently there is nothing in place to regulate the implementation of digital currencies in the EU. It has been noted that seven European countries have instead sought to implement their own regulations for digital currencies, whilst the effectiveness of this is to be argued. It has further been thought that there is evidence that the European Central Bank has stressed the importance of the EU adopting regulations that can be implemented across all member states.
Nevertheless, member states such as the UK and France seem to be opposed to such a concept, as is evidenced by Bruno Le Maire – French Economy and Finance Minister, who has openly opposed cryptocurrencies. He further believes that digital currencies would only prove to be problematic for the country in respect of ensuring its economy is stable. In addition, UK Sport Committee Chair Member – Damian Collins, has made a public stand against cryptocurrencies, as he stated that such currencies only seek to encourage companies to develop beyond their intended means.
Thus, it could be inferred that the population of digital currencies increases, the more public officials may become concerned as to how such currencies will affect each member states economy, and in particular, as to whether this would ultimately devalue the currencies currently in use for each of the member states.