A new study from the European Parliament Committee on Economic and Monetary Affairs states that cryptocurrency can be utilised as an alternative to money.
The comprehensive review defines the work of crypto and its impact towards the global economy.
Here’s a look at some of the highlights.
Crypto Can Be Used as an Alternative to Money
“Digital currencies that exist only as virtually or electronically also called as ‘virtual currencies’ or ‘cryptocurrencies’. Digital currencies commonly can be defined as ” a digital or electronic representation of value, not issued by the central bank, credit institution or e-money institution, but in some situations, it can be used as an alternative to money.
The law of supply and demand determines the value of digital currencies depending upon the potential exchanges of goods or sovereign currencies. It cannot be supported by any financial authority. Computer algorithms that often helps to create scarcity in order to maintain value, manage the supply (creation of new units). Use of DLTs to regulate the value exchanges is one of the commonly known features of digital currencies. Services namely cryptocurrency payments, cryptocurrency wallets, exchange and trading solutions for cryptocurrencies (cryptocurrency brokerage) and mining is incorporated by the digital currencies management.
Crypto Is Disruptive and Innovative
Other innovations that revolve around the financial sector is Bitcoin which is a new cryptocurrency that uses P2P technologies, like blockchain. Bitcoin which is a cryptocurrency is operated in a decentralised way offers technological and operational standards that are a source of interruption for the entire sector, including monetary policy and financial stability.
AI, cloud computing, biometrics, digital identity, the blockchain, cybersecurity, RegTech, internet of things (IoT), augmented reality, etc are those technologies that stand out from the utilization of disruptive applications.
Central Banks May Issue Their Own Digital Currencies
The section of permissioned digital forms of money advanced by banks, even by national banks, can reshape the present rivalry level inside the between cryptographic money advertising, expanding the number of competitors. A possible inadequacy of ancient competition policy to handle competition problems within the cryptocurrency markets are often found, suggesting direct public participation through a central-bank digital currency as a remedy.
Crypto Is Challenging for Regulators
The global idea of digital money markets is additionally a test to rivalry strategy at the European level. several players operate from international locations outside the jurisdiction of European competition authorities, that makes investigation or prosecution on anti competitive behaviours tougher. Europe leads, at international level, the provision of pocketbook and exchange services, with 42nd and 37th in terms of variety of players. It’s conjointly the principal actor in payments (33%). yet, the most weakness of Europe is that the concentration of the mining activity on non-European countries (Europe solely capture simply thirteen of this mining market). Mining is that the most vital, unobtrusive and innovation subordinate action inside the digital currency showcase, and thereby and by is by all accounts a noteworthy centralization of mining exercises happening guarantee.