Public and private sector cryptocurrencies: will Bitcoin finally dethrone?



mediawire_image_0mediawire_image_0

Over the past few years, the cryptocurrency ecosystem has evolved from relative obscurity to being considered one of the defining technologies of this century. Digital currencies offer numerous advantages over traditional forms of money, such as banknotes, namely reduced settlement times, unlimited global liquidity, greater availability and ease of storage. So far, several global tech giants have expressed interest in technology, with many like Facebook and Air Asia even announcing intentions to launch its own native cryptography.

In this article, we explore this sudden attack of corporate and government-issued digital currencies and unravel their potential impact on the underlying technology and the market as a whole.

Crypto in the public sector: China at the helm

mediawire_image_0mediawire_image_0

China is the undisputed leader in terms of digital and application-based transactions. Digital wallets, including AliPay and WeChat Pay, are used Pay a huge 54% of e-commerce transactions every year. Traditional payment methods, especially physical cash, are heading towards extinction in the region. This transformation took place largely in recent decades, following in the footsteps of rapid urbanization and technological growth in the country. According to a blog post by the World Bank, a considerable part of China's financial inclusion was achieved through some form of mobile banking system.

As expected, China was one of the first countries in the world to announce its own digital currency issued by the central bank. Linked to the yuan, the token was confirmed for the first time months after the government banned the trade of traditional cryptocurrencies such as Bitcoin and Ethereum in the region.

According to a report by the South China Morning Post, while the central bank of China made smooth progress on the digital yuan project in 2019, a token release date has not yet been finalized. Other financial institutions that have explored the possibility of a similar digital currency include the Bank of England, the Riksbank of Sweden and the central bank of Uruguay.

Private sector tokens: the new norm?

At the corporate end of the spectrum, companies such as JPMorgan Chase and Facebook have also submitted digital tokens based on blockchain technology. Both efforts, called JPM Coin and Libra respectively, are aimed at making instant cross-border payments a reality. Such a system would offer end users a convenient and almost free alternative to traditional money transfer options such as SWIFT.

Meanwhile, in Japan, a coalition of 60 banks headed by Mizuho Bank is competing to spread its own digital payment solution. Launched in early 2019, J-Coin Pay allows users to pay for goods and services using a smartphone-based application. Notably, Japan is considered one of the most crypto-friendly nations in the world, especially because the country was the first to recognize Bitcoin as a legal payment method. Surprisingly, however, cash payments are also the de facto option for all transactions. According to the Japan Times , “ Four out of five purchases are still made with cash in Japan .”

While these public and private sector tokens will undoubtedly boost global financial inclusion, there is a big difference between these offers and, say, Bitcoin.

Unlike the aforementioned projects, Bitcoin and most of today's encryption offerings are fundamentally decentralized and are resistant to external influence, control and authority. In contrast, the Facebook Pound and China's digital yuan are almost guaranteed to be centralized. Ultimately, these solutions are less a fiat currency replacement and more an accessory for cash.

conclusion

mediawire_image_0mediawire_image_0

That said, it is worth noting that public interest in these projects tends to increase a corresponding rebound in the prices of traditional cryptocurrencies. According to Statist , the number of new digital wallets has steadily increased during 2019, with no signs of stopping in 2020. For investors who track these trends, these circumstances offer a lucrative investment opportunity. However, timing the market is a skill that evades even some of the most experienced investors.

Alluva , a free token reward-based web app, eliminate this problem by rewarding users for accurate price predictions. This way, Alluva allows new and experienced investors to capitalize on the crypto market’s growth in a risk and investment-free environment.

Given that the majority of public and private sector cryptocurrencies are still months and years after their launch, it is difficult to say how much they will affect the valuation of the cryptocurrency market. However, Facebook and other corporate giants seem determined to take the mainstream of cryptocurrencies in this new decade.

Disclaimer: Content Produced by Alluva

comments