Possible Consequences of Cryptos Becoming Official Currency

Bitcoin and Ethereum are the two most popular cryptocurrencies in the world. There are numerous crypto exchange platforms on which these cryptos are traded regularly. Some countries such as Argentina and El Salvador have granted official recognition to Bitcoin to resolve their recurring economic problems. In the US, the SEC has granted recognition to Bitcoin ETF. Therefore, these trends suggest that there is a high possibility that cryptos may well gain global acceptance and steadily get official currency status in several countries.

Benefits of Granting Official Currency Status

Cryptocurrencies, especially Bitcoin and Ethereum are the leading cryptocurrencies that may gain official currency status because of their higher levels of reliability among the masses.. Several external factors have led to the record-breaking price increase of Bitcoin. There is a growing worldwide sentiment that centralized financial institutions have many disadvantages and emphasizing decentralized finance (DeFi) is the way forward. Therefore, it is necessary to highlight some of the major benefits of granting official currency status.

Promote Financial Inclusion

Financial inclusion holds the key to reducing wealth inequality. If a majority of countries grant official recognition to Bitcoin and Ethereum, then, there is a fair possibility that many underprivileged and unbanked people will get financial access. This will be the first step towards their empowerment if the external and internal circumstances remain favorable. Therefore, this may help many such individuals to uplift their economic conditions.

Transform Global Trade

The rise of crypto exchange platforms indicates that territorial borders are no longer relevant in financial transactions. Blockchain technology in these platforms ensures fast and secure transactions across borders. Therefore, once cryptos become official currencies, then the entire landscape of global trade may dramatically change for good. There may be newer uniform regulations and rules governing the mode of crypto transactions dominated by Bitcoin. This may sometimes lead to differences of opinion among governments and central banks since most countries have distinct economic realities.

Consumer Behaviour May Undergo Transformation

Once cryptos become official currency in many countries, consumer behavior may become aversive or ignorant of cash altogether. This may positively affect their buying behavior and repose more faith in digital currencies. However, there is also a possibility that centralized digital currency, stablecoins, and cryptos may offer stiff competition to each other to dominate the digital market. The other anticipated transformation is that blockchain technology may gain enormous reliability and become a disruptive force in other sectors too. Consequently, it may help consumers to think outside of the box while buying goods and services. 

Bridge Digital Divide

It is a fact that the increase in internet penetration, and smartphones in recent years has resulted in the growth of cashless transactions. However, the digital divide persists in many places in the world. The digital divide is one of the major reasons responsible for perpetuating and widening financial inequality. The approval of cryptos may help in bridging this digital divide. It may break free the monopoly of many centralized agencies in the world and further popularize the usage of cryptos.

Also Read- The Overall Impact of Bitcoin’s Record Price Hike

Bottom Line

The consequences of granting cryptos the status of official currencies may turn out to be mostly desirable and positive. It can truly transform the entire financial landscape. There is a high possibility that it may lead to the mainstreaming of cryptos and disrupt the monopoly of governments and central banks. Furthermore, it may narrow the gap of financial inequality and increase the credibility of decentralized finance among the masses.