The International Monetary Fund (IMF) is making a strong case for the transformative potential of Bitcoin and cryptocurrencies.
In a new video posted on Twitter, the international organization highlights the use cases of cryptocurrencies by shining the spotlight on the shortcomings of traditional payment systems.
“When we buy or sell things, the payment is usually processed by a bank or credit company. Problem number one, the companies often take a cut of the transaction. Two, we have to trust these companies to protect our sensitive data from hackers. Three most international payments take a long time and are expensive.
To solve these problems, we could use a special currency that is secure and based on the science of cryptography, which is a way of protecting information using mathematics. This special type of currency is called a cryptocurrency and only exists in computer networks.
When you send someone the special currency, the money goes directly to them, removing the middleman, and at the same time, the transaction is broadcast to the entire network and recorded in a permanent way, which means it’s almost impossible to fool the system.
Costs of making payments are lower. Transactions are faster, especially across countries and even those people around the globe who don’t have bank accounts can buy or sell goods and participate in the global economy.”
While cryptocurrencies offer numerous benefits, the IMF cautions that digital assets are not free from risks.
“The transactions in most cryptocurrencies are anonymous. Some cryptocurrencies can even be untraceable. This can make it easier for the bad guys to make payments without being noticed.
If you lose your password, you could lose all your money. At the moment, cryptocurrencies are highly volatile. They can’t process large amounts of transactions quickly yet, and they’re not even widely accepted.”
The IMF says that once the current limitations of cryptocurrencies are addressed, digital assets may hold the key to the future of money.
“But if we can counter the risks, then this new technology or some variation of it can completely change the way we sell, buy, save, invest, and pay our bills. And who knows, this could be the next step in the evolution of money.”
Featured Image: Shutterstock/Pakpoom Makpan