7th August, 2023

As technology develops at a rapid rate, so does the way that we use our money. The use of contactless payments was already becoming increasingly popular but, unsurprisingly, it seemed to explode during the COVID-19 pandemic. As of March this year, approximately 75% of debit card transactions are contactless.

Many people believe that we will eventually become a cashless society and, with the likes of cryptocurrency becoming more and more popular, it seems as though we are getting a step closer every day.

Cryptocurrency is a form of digital currency that is created by code, so all transactions are carried out via your computer network and rather than carrying your money in cash or your bank account, it’s stored in a digital wallet.

The first type of cryptocurrency, Bitcoin, was introduced in 2009 and is now the most valuable and well-known. The creator, or creators, of Bitcoin work under the alias Satoshi Nakamoto, but their real identity remains a mystery. So, it’s unknown whether it’s a single computer programmer or a group of programmers that are responsible for the introduction and subsequent boom of cryptocurrency.

However, despite being in use for around 14 years at this point, the cryptocurrency market is not regulated. This means that there is very little protection for those who choose to buy and invest in cryptocurrencies and if, for whatever reason, a huge market crash was to occur, many people risk losing large amounts of money.

You can understand why there are calls for the regulation of cryptocurrencies when comparing them to the likes of pensions, mortgages and other financial products that are regulated by the Financial Services Compensation Scheme (FSCS), where up to £85,000 of your money is protected. Also, the Financial Ombudsman Service (FOS) is there to help with disputes over these regulated services.

With that being said, there are always pros to go hand in hand with the cons and, when it comes to cryptocurrency, these pros include things like accessibility, security, and transparency.

Cryptocurrency can be accessed and used by anyone, so long as you have an internet connection and the means to actually use the internet (computer, smartphone, etc.). Setting up your cryptocurrency account is known to be much quicker than opening the likes of a bank account, given that there is usually no need for ID verification or checks on your credit or background. Although this may not make everyone feel completely comfortable – as with anything, people could surely misuse it when there is such a level of anonymity.

That’s where the transparency element comes in, as all transactions are shown on a ‘blockchain ledger’ which is publicly accessible and allows people to look up transaction data. While this won’t put a complete stop to the misuse, it can help to avoid fraudulent activity as people can prove what they did or didn’t send and how much funds they have available.

On the flip side, this ability to remain fairly anonymous has been known to aid individuals in carrying out nefarious activities, such as tax evasion. The use of cryptocurrencies such as Bitcoin are also used in less-than-favourable areas of the internet, including the dark web.

Using cryptocurrency is said to be very secure, as nobody else can access your digital wallet unless they somehow get hold of your ‘private key’. Unfortunately, this also means that if you lose your own private key then you also cannot access your wallet and the funds can’t be recovered.

Before jumping into the world of cryptocurrency, it’s important to remember that the market is well-known to be incredibly unstable and, given that it is influenced by supply and demand, depends heavily on public perception and hype from the media. Look at Dogecoin for example, which started as a joke in 2013 but quickly increased in popularity following a series of tweets from Elon Musk. However, its fall was as sharp as the climb when it dropped by around 40% following Musk’s appearance on the popular American television show Saturday Night Live, where he joked about Dogecoin and ultimately struggled to explain what it actually was.

Ultimately, the use of digital currency will continue to grow as we move forward into a world that is more digital now than it has ever been, yet a world where so much more is said to be possible. So, whilst keeping up with the times, it’s also important to educate yourself on both sides of the coin…


Written by: Shannan Errington

*Please note that the above information has been gathered through secondary research. The information provided is not based on our opinion. You should seek further guidance and information before making an informed decision.

Sources:
https://www.finder.com/uk/debit-card-statistics
https://money.usnews.com/investing/articles/the-history-of-bitcoin
https://investingreviews.co.uk/cryptocurrency/cryptocurrency-regulation-uk/
https://www.fool.com/investing/stock-market/market-sectors/financials/cryptocurrency-stocks/benefits-of-cryptocurrency/
https://edition.cnn.com/2021/05/09/investing/dogecoin-elon-musk-snl