The International Monetary Fund (IMF), a consortium of 189 countries working to foster global monetary cooperation and financial stability, has just hailed cryptocurrency and its underlying technology for revolutionizing the payment industry, however, the international organization highlights out five principal risks that are a cog in the wheel of the digital currency’ success, this can be traced to a video released by the organization a few hours back.
Yesterday, August 23, IMF released a video, explaining the fundamentals and benefits of cryptocurrency. The video gave lover of cryptocurrency more reasons to be bullish, as many claimed that it is a remarkable thing that IMF is ‘shilling cryptocurrency,’ importantly because Bitcoin and most altcoins are making a bullish move.
The video, titled “What is Cryptocurrency”, began by highlighting some of the challenges faced while making payment through banks or credit card companies. It stated that the companies that help execute payment take a cut of the transaction.
The problem of trust also mentioned. The video explains that users have to trust these companies to help guard their delicate data from hackers. Transaction time is another major factor that makes the existing payment method archaic. IMF in the video said the large processing time especially for international remittance, and the huge cost associated with it plays down on the potency of bank and credit card companies’ payment services.
IMF says these problems can be solved by cryptocurrency. It mentions that crypto is secure, and was designed with the use of cryptography science. It helps secure information away from a third-party using mathematical models.
IMF said it is a special type of currency that exists only in the computer network. Cryptocurrency helps eliminate the presence of middlemen, letting users send money directly to the recipient without any hassle.
Transactions performed on the cryptographic technology are broadcasted throughout the entire network and details of the transactions are recorded in a permanent way. This ensures the immutability characteristics of the network, making it nearly impossible to fool the technology, IMF explains.
Unlike the rudiment mode of perfecting transactions, the cost of payment via cryptocurrency is low and the transaction time is super fast, especially across the borders. Users do not necessarily need to have a bank account before executing transactions via cryptocurrency, thus making life better for the huge unbanked population across the globe.
5 Major Risks Affecting the Growth of Cryptocurrency
The organization, headquartered in Washington, D.C, explained that in spite of all the benefits which the payment technology puts forward, it has some crucial risks, these are explained below:
- The anonymity feature associated with cryptocurrency makes it easy for hackers among some other cybercriminals to move funds easily with little or no information to trace them.
- The problem of password loss. If you lose your password, all your assets may be gone forever.
- Cryptocurrencies are highly volatile and unstable.
- IMF claims cryptocurrency cannot process a large number of transactions quickly yet.
- They are not widely accepted.
Nevertheless, IMF sees a brighter future ahead of cryptocurrency. The organization believes that if the risks can be countered, the nascent technology behind cryptocurrency can change the way we invest, trade, and pay our bills in the modern world completely.
“Who knows, this could be the next step in the evolution of money,” IMF concluded.