It just looks like the people who issue the fiat money and the organization backing the fiat has so much control over the affairs of people. We are mostly using the token-based money like the bank notes and physical coins and this is being used for exchange in a peer-to-peer setting. And, the payee in this process should be able to verify if the token with which the payment is being made is a valid payment object that is verifiable. Users need to be able to verify if it is counterfeit money or not. This is where institutions hold their power.
Will cryptocurrencies be able to deliver what they promise? Or will they end up as short-lived curiosities? BIS have already explored this idea. BIS have examined the supporting technology and have closely monitored the associated economic limitations in the process.
Cryptocurrencies are aspiring to promise and maintain the stability and trust in value. They depend on the fact that the protocol completely runs by the rules. The set of rules are the protocol or the computer code. The code clearly establishes how the participants will be able to transact in the process. So, this means there will be no human interference and everything will take place as programmed and therefore they believe that there will be no manipulation.
The next strength about this technology is that they are making use of a Distributed Ledger Technology (DLT) because of this, the ledger will document the entire set of transactions. The transaction details cannot be manipulated.
The third strength of the cryptocurrency network is the participation from a decentralized network of developers who follow the rules of the protocol and update, store and read the transactions that take place on the protocol.
Those who support cryptocurrency claim that these three factors are its strength making it possible to create a trustless system. They also claim that the protocol method of money does not have the misguided processes of incentives like the banks and sovereigns.
In summary, the three key features of cryptocurrency are that it is digital and therefore has the capability to prevent counterfeit and fraudulent transactions. Next, it is created privately and its value is based on the fact that several people will accept it as a system of value. Since there is no liability, if no one is accepting it then the value cannot be redeemed. Experts claim that it is a lot similar to commodity money and when a group of people stop accepting it, the value perishes! Thus, the promise of cryptocurrency will be here to stay for as long as people agree to keep its value alive.
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