Digital Currency – The way forward

Digital Currency has arrived in many countries, including India in pockets, but major economies are still toying with the idea of how to bring it under currency regulations.  The idea of Bitcoin was to be completely decentralized without any moderating platform.  It was supposed to be a cryptocurrency and supposed to keep the identity of the transactions secret. This is the fundamental irony.  

With a collective value of USD 3.5 B, they have evolved as the next big thing in the payments and transactions space.   But more than the role as an alternative currency, the core of Bitcoin, which is BlockChain is what makes the future strong for Digital currencies.   

Digital ledgers that are literally tamper proof are supposed to be the center piece of this system.  However, there are some security pitfalls during implementation. More than 40 known thefts in the range of $1 million have happened.   Various firms and technologies are working to resolve these issues through game theory and cryptographic methodologies.  Cryptocurrencies may have subtle bugs but can have devastating effect, says Ari Juels, co-director of IC3 in an interview to Nature.com. To fix the basic cryptography mistakes, there are academic experts who are reviewing the protocols. Since users can mask their identity, the currency has proved also to hid criminal activity and money laundering.  This has emerged as primary concern across the world.  

There is one point of view that Bitcoin cannot last as a decentralized authority.  However, there is another point of view that Bitcoin is the Microsoft of digital currency and will adapt and evolve as rules and other players gain strength.

Figure 10: Digital currency and its disruptive technology are here to stay

The advantages of digital currency are profound.  Faster online transactions, unbiased tracking of transactions through BlockChain ledgers are to name a few.  The future lies in how digital currency becomes mainstream.  Banks will have to recognize that with the advent of faster payment systems, digital currency acceptance will only accelerate.   Digital currency evangelists could do well to understand that however disruptive it is, digital currency’s security and legal standing make its adoption a challenge.  As more people work on this, more people who are using digital currencies is growing.  A great opportunity for the digital economy is up and running.  The time for digital currency has come.