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A New Economic Order: An Overview

The term Cryptocurrency, or the Blockchain Technology-based digital currency that requires no Central Bank or Government, has been successful in stealing the show across the globe. It is almost impossible to counterfeit this coin. Interestingly, the concept of cryptocurrency has been there for more than a decade, as Bitcoin, the most well-known brand among them, had appeared in the scene in 2009. However, this electronic currency triggered a sensation in 2021, as people became quite familiar with Bitcoin, and Ethereum. In order to understand the rise of cryptocurrency, one has to realise the importance of faith in the world of economics.

The value of currency entirely depends on faith, ensured by the institution, called Government; otherwise, a piece of paper would become valueless. It is because of this faith or assurance, markets also respect a piece of plastic, with magnetic strip or electronic chip. Cryptocurrency has given many a confidence that, till date, has not been possible for any Government or Non-governmental institution to offer. Cryptocurrency has managed to win users’ faith mainly because of its reliance on knowledge about technology, and the non-interference of Big Brothers.

In a way, it is increasingly being observed that the world’s largest technology companies are responsible for the increasing inequality in the 21st Century. The global community has started relying on Web 3.0 to get rid of these tech monsters. It is a new environment where people will become completely self-sufficient due to the advancement of technology. They don’t have to rely on the Government or on Tech Giants. For people, cryptocurrency is the biggest hope right now to enjoy the freedom of decentralisation, as far as economic transactions are concerned, as they would not have to rely on banks, and to pay hidden fees mentioned mostly in the fine print. They enjoy the freedom only by following some rules made collectively.

Although this hope has not yet been fully realised, the developed nations are working hard to materialise this. A total of USD 93 billion has been invested in this decentralised finance sector through various cryptocurrencies, over the past two years. Those, who were sceptical about the future of cryptocurrency a few years ago, have changed their minds. It is seen that the investment value of cryptocurrency has risen sharply, even after repeated falls. With people having confidence, the exchange rate of established cryptocurrencies, like Bitcoin or Ethereum, has risen sharply in Dollars, Pounds or Euros. The benefits of cryptocurrency have amazed those investors, who don’t care about Web 3.0 or the human face of the economy. In just four years (2017-21), there was a 6100% jump in the price of cryptocurrency! Interestingly, real estate prices have risen by only 29% in the US during this period.

In October 2021, ProShares, an investment management firm, launched the ProShares Bitcoin Strategy ETF, which was listed on the New York Stock Exchange under the ticker BITO. It was a huge success for investors in cryptocurrency. Experts believe that it would further increase investment in cryptocurrencies around the world, and also increase dependency on cryptocurrency in financial transactions. Most importantly, one can invest in cryptocurrency without purchasing it. This will boost the credibility of cryptocurrency as an economic asset. Although countries, like India, Russia and China, have imposed a ban on the use of cryptocurrencies; achieving credibility could be the key to future success of digital or virtual currencies.

It should be noted that in spite of government sanctions, preparations are underway to create a state-sponsored cryptocurrency. It means that the State Power is well aware of the fact that the medium of exchange would gradually become digital in the coming days. States are worried about the underlying autonomy of the private cryptocurrency, as there is no room for government intervention. It is also a fact that many cryptocurrency platforms are deceiving people by highlighting their lucrative profit-making features.

The question arises here is: What will be the relation between the Government and private cryptocurrencies? Several countries are all set to recognise the digital currency as a medium of transaction, while others are still not ready to do so. Perhaps, the scenario would become clear in 2022.

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