Pros and Cons of Cryptocurrencies for International Payments

Source: medium

In today’s world, where technology has paved new ways for people to interact and conduct businesses, cryptocurrencies emerged as a beacon of hope for many who wish to carry out secure payments internationally. Want to learn more about the cryptocurrencies and their role in international payments? You will get a lot of informination on

What are Cryptocurrencies?

Source: Blockchain/Cryptocurrencies

Ever since people learned to make dealings, conduct businesses, and trades, they have used different methods to secure and pay for businesses’ trades. From the barter system to metals, gold, and silver coins to the introduction of paper currency, the concept of money has evolved in every era. And this process still goes on. With the continuous advancements in technology and globalization, businesses and trades have gone to a broader level, i.e., international level.

Where the methods of payments on an international level are considered a different scenario altogether, the concept of cryptocurrencies seems to have become very popular in global businesses.

The concept of cryptocurrency is nothing like we have ever seen or imagined in the past. It is a virtual or digital currency that has revolutionized the international ways of making payments. Its continuous popularity is based on a single fact, i.e., its high level of security. Because cryptocurrency uses cryptography to ensure its safety, it has become the preferred means of international payments.

Today, there are about 856 cryptocurrencies available in the world. However, the most popular and widely used among these are the Bitcoin, Ripple, and Ethereum. These three cryptocurrencies have the most value today, and their numbers are in double million figures.

International payments, then and now

Source: wikipedia

Before the advent of cryptocurrencies, making international payments was not that simple at all. It involved a lot of work and took place mainly through the banks. However, the process was relatively slow and took a lot of time. The correspondent banks needed to communicate with the parties and other banks through posts before making payments.

With technological developments, the gaps began to fill up, and the process becomes relatively fast, but with the increase of its speed, the fees also rose. Today, international payments through banking and other electronic funds transfer systems have become either expensive or time-consuming.

Cryptocurrencies have filled this gap. They are not only secure but are also fast with a negligible fee structure. For this reason, they have become a popular mode for international payments.

Advantages of Cryptocurrencies for International Payments

Source: currency

When we look at it, cryptocurrencies are not only a smart concept but also offer a vast number of advantages. Here are a few of its benefits:

  • The first and foremost advantage of cryptocurrencies in its ease. Unlike banks and other fund transfer systems, these are a straightforward way of transferring funds to a party. The transaction is facilitated by using private or public keys that ensure security. The transfers are speedy with minimal fees as compared to that of banks or other funds transfer systems. Therefore, it’s a win-win situation for international parties.
  • Cryptocurrency is highly secure. Unlike in the banking system, the sender’s data or the currency’s recipient is not shared. The only information shared is about the transaction. Therefore, it offers zero access to the senders’ or recipients’ wallet.
  • Because cryptocurrencies are considered free from external forces such as governments, politics, or economies, it has no master server. All transactions occur through soft wares and are free from the government or bank’s control. Thus, the user with a wallet has the sole control over the trades.
  • What makes cryptocurrencies so convenient is that you can send or receive payments from anywhere in the world without any transaction limit. The only requirement is the wallet. There is no other limit.
  • For international businesses, the use of this technology eradicates the need for managing several currency accounts. Thus, the transactions become convenient, free of risks, fast and confidential. Also, the transaction fees are reduced to a greater extend.
  • Using digital currency can also simplify forex management in international businesses. Using this means for international payments makes is an ideal way for countries that have volatile currency. Using digital currency protects businesses from sudden currency changes.

Disadvantages of Cryptocurrencies for International Payments

Source: computerworld

Some advantages make international payments through cryptocurrencies preferred by many; it also involves several disadvantages:

  • As much as the concept seems tempting for international payments, some countries still don’t allow the exchange of cryptocurrencies. In fact, they have made such transactions illegal. Therefore, it is impossible to work on digital currencies entirely.
  • The exchange rate of such currencies has seen high volatility. Therefore, buying such coins can impose risks on businesses that wish to use it as a transaction mode for a specific payment.
  • Having no central party to control the whole process is a good thing; it also imposes a disadvantage. Because it is free from any central control, government, or bank, there is no element of guarantee. In other words, the risks involved can include money laundry, illegal financial activities, or terrorism.
  • Lastly, despite having a simple transaction method and software, wallets are still exposed to hacks. With the increase in technology, master-minds can indulge in hacking businesses’ wallets and resulting in losses for them.

No matter how popular and valuable the concept of cryptocurrency may seem for international businesses, there is always some risk involved. However, its advantages seem to overshadow its disadvantages. This new technological invention has opened new doors for international businesses, and it has an undeniable appeal that has the power to change the face of the worlds’ business environment. However, there is still some time for the whole world to indulge in this technology. Until then, banks and other systems can also find new ways to provide better solutions and work towards their survival in the longer run.