The Future of Currency - Essay Sample

Introduction

Since very early years in the history of humankind, there has been a need for a well-structured medium of exchange. This need manifested itself because no person can depend on themselves fully - there must be openings and protocols to exchange commodities to enable people to acquire what they lack. An immediate occurrence in an attempt to mitigate this challenge was the giving out of other commodities to acquire others, a method that became widely known as the batter trade method. For instance, one could give several cows for a plot of land depending on the agreement that prevailed between them. Over time and due to the advancement in the lifestyles of people, the limitations of this method became more pronounced - there had to be coincidence of wants, the goods to be exchanged had to be there at the time of the transaction and the quantities to be exchanged were always subject to the agreement between the transacting parties hence no particular set standards. Furthermore, the method did not to a greater and satisfactory extent meet the basic characteristics of money such as durability, divisibility, portability, uniformity, and free acceptability.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

In an attempt to mitigate the shortcomings above, other standard commodities such as gold were used as materials of the trade. This is the time in history when the word money and currency became much known to many. Generally, this provided a well-structured means of the store of value, the medium of exchange, and unit of account. Furthermore, it helped bolster the trust between the transacting parties as to the pieced of gold provided, for instance, representing the quantity of the commodity that was being exchanged. The government decrees would later introduce an improved version of this system in the form of the reserve systems, commonly known as the fiat money. It is notable to state that to date; this is the widespread form of money that is used around the world and involves the use of special notes and coins with certain unique features and values that ensure they cannot be counterfeited. The regulatory bodies continuously put in place a variety of measures to prevent the occurrence of unregulated activities that could undermine the credibility and the acceptability of the currencies such as continuously changing them and so forth.

So far, so good, the fiat system has served humanity very well. Many still prefer them for their transactions since, to a greater extent; they addressed the basic needs of people as far as the initial currency needs were concerned. The fiat currency eliminates the need for trust between the transacting parties as it is the medium of exchange that is generally acceptable in any financial dealing. Its supply can also be controlled using the various fiscal methods to avoid the continuous fluctuations in the commodity prices. Such controls include preventing oversupply that could lead to more money chasing few goods and, therefore, inflation or undersupply that could otherwise culminate into underdevelopment of the economy. On the contrary, however, the fiat currency system has been on the receiving end for the complaints that it perpetuates bureaucracy and monopoly, and that the overall system of production of the currency is expensive.

Flat or Crypto

These perceived shortcomings, coupled with others, led to the emergence of the cryptocurrency movement in the early twenty-first century, particularly in the year 2009. Cryptocurrencies include digitally transferable assets such as Bitcoin and Ethereum among many others that are obtained through cryptography. Although this currency system receives huge support majorly from the tech-savvy and educated youth populations who hold a very small decision making space in the financial sector, it is remarkable that it is fast taking shape. In particular, the system attempts to fix some major shortcomings of the traditional fiat currency system such as the bureaucracy and the perceived monopoly by the government reserves. It does this by privatising the cryptocurrency mining itself and making the various codes open source. It also makes the financial transactions traceable by the introduction of public ledgers that must be verified by all in the system after each transaction. The cryptocurrency transactions are also fast with the approval of a Bitcoin transaction in less than ten minutes and other new forms such as Ethereum in about two minutes.

According to Satoshi Nakamoto, the cryptocurrency system provides a lot of improvements and efficiencies to the traditional fiat currency that defines the true future of the currency system. This school of thought has been supported by various research works that have been carried out. In particular, the cryptocurrency uptake in the individual, financial as well as the ecommerce markets is on the record high according to the World Bank. For instance, various major world corporates such as Microsoft and Dell, among others, have adopted cryptocurrency as a means of payment. The system is also appealing to a majority of tech-savvy populations that are against the traditional fiat currency system. Further, a growth in the electronic money transaction in many countries such as Kenya who's more than half of the GDP is transacted through the mobile phones, and other electronic means only signals that the future of currency is crypto!

Conclusion

In conclusion, even with the support of the cryptocurrency for future use in the monetary systems, there are glaring adjustments that ought to be made. Negative effects of network overload and hacks that can lead to disruptions in the world's entire financial system should be prevented by all means through the introduction of additional regulations. Such regulations can go in a long way to promote cryptocurrency stability as well as limiting the competition that has been on the increase of the late. The business cycles of the Cryptocurrencies themselves need to be increased to boost the investors' confidence. A true partner in this is the individual governments and the general public through proper sensitisation so that they can know the benefits and the mining methods themselves.