Implications of Alternative Digital Currencies on society, economy and legal system

The world is slowly moving towards digital currencies and many people are using them for their everyday financial transactions. In this regard, it becomes important to analyze the future of this currency as it can have a major impact on the overall economy of many countries. It has the potential to destabilize the entire banking sector across the world. For this reason, many countries are opposing the growth of digital currencies like bitcoin, litecoin and others. Among them, Bitcoin is the most popular and gaining fast acceptance among many global companies.
Digital Currencies are not LEGAL TENDOR
This is one thing that you need to remember before using them for your transactions. While it offers a lot of convenience in the short term, they are not legal tendor and you will have difficulty in approaching the court if you are stuck with any transaction. The problem can also arise in the event of fraud when digital currencies are used and you will not get much help from the law enforcement agencies. If you are planning to enter into a large contract using Bitcoins or other modes of digital currency, you need to be very careful as it is also subject to price fluctuations in the market and you will not get legal backup for your contracts.
On the other hand, if you are just interested in using them for online shopping and other small transactions, you can easily go ahead and give it a try as they offer lot of convenience for consumers. Many leading shopping portals and Internet companies are accepting this form of digital currency and you can even find special ATMs dedicated to such digital currencies across the world. You should be careful only when you want to invest large amount of money in this form of currency.
Benefits of using Digital Currencies
Anonymous transactions: this is very useful when you want to hide your identity while shopping online or making any payment. It can offer protection from phishers and you will be able to safely use your digital wallet to buy various things and avail different services online. While this is the positive side of the story, the law enforcement agencies are not in favor of anonymous transactions as it can give a boost to the black market economy
Independent of government and banking regulations: In many cases, you will not be able to conduct various transactions in the online market due to restrictions with the local authorities or the banking system. In this situation, digital currencies like bitcoins and litcoins are a boon and you can easily use them to complete your transactions with your business associates. The transaction is very difficult to track and authorities will not be able to levy any tax on these transactions.
Provides safety: The promoters of digital currencies often advertise this as a safe platform in comparison of using your credit card and banking account for the online transactions. The servers constantly update data and it is not possible to hack the digital currency system according to experts in the industry. However, this aspect is debatable and nothing is safe for a long time in the online world.
Less transaction fees: This is due to the fact that it becomes easy to avoid tax for your transactions when you make payment through digital currencies like bitcoins and litecoins. These crypto currencies are very difficult to trace and even governments do not have a mechanism to track the transactions conducted through these currencies. In this way, you will be able to reduce the cost of transactions by a huge margin.
Growth potential: As these currencies are still in the early stage of development, there is a huge scope for its growth in future. This is likely to happen when more and more users across the world start using such alternative digital currencies for their transactions. In this situation, you will be able to invest money in such currencies and see good returns for your investment in future. Many people who invested money in the early stages of bitcoins have made millions as the value of bitcoins has increased by a huge margin in recent years.
What is the future potential of digital currencies and can they enter the mainstream economy?
This is the difficult question that is on everyone’s mind in the financial market. While few people are excited that it can enter the mainstream financial market and bring in lot of changes, many people are worried about its entry to the mainstream market. There are many reasons that support these concerns and let us try to understand them in a detailed manner.
What are the opportunities for Digital Currencies in future?
• Market without geographical boundaries:

One thing that separates the use of digital currencies from the regular ones is the ability to use them beyond geographical barriers. It does not even distinguish between citizens of different nations and their age or other criteria while making the transaction. Anyone from any part of the world can have an account and use bitcoins or other digital currencies for the financial transactions. There is no need to worry about the local banking regulations and transactions can be completed quickly without any hassles. This can boost the international market in a huge way and everyone across the world will have a common platform to pay and receive money for goods and services.

• Transaction is fast and safe:

You need not wait for regulatory approvals to complete your transactions with international clients. Everything gets done in quick time and you will also have proper records to track the transactions in future. They are also very safe and no one else can get hold of your account unless they know the pin number. In this way, there is no risk of anyone stealing your digital money. These transactions do not come under the purview of the government agencies and this means that you can complete transactions independently without waiting for approvals.

• Big companies are accepting digital currencies like Bitcoins:
In what comes across as a major boost to the digital currency markets, global giants have started accepting bitcoins for payment and this shows the future potential of such currencies.
• You can use bitcoins to shop for various products across Amazon and Apple Store.
• Even Microsoft and Dell are accepting bitcoins for various transactions.
• Users can book hotel rooms on using bitcoins.
• Bitcoins are now accepted across thousands of shopify stores all over the world.
• You can use bitcoins on Home Depot stores in US.
• Internet companies Wikipedia and WordPress now accept bitcoins.
• Popular retail giant Subway also accepts Bitcoins from customers.
• USA alone has more than 500 Bitcoin ATMs.
• There are special ATMs dedicated to bitcoins in Canada, Australia and various regions of Europe.
Challenges for the growth of Digital Currencies
The future for Digital Currencies is not a bed or roses and it is having lot of hurdles from different sections of the financial market. Let us try to understand the limitations of such currencies when it comes to using them in the mainstream economy.
• Huge Volatility in price
The price of these digital currencies is changed by a huge margin on a daily basis. This drastically affects its chances of being accepted as a global currency. Even though similar things happen with other currencies like dollars and pounds, the volatility is not so high and they are regulated in many ways by leading financial institutions all over the world. This does not happen with bitcoins and other digital currencies and they fluctuate a lot due to various market conditions. In this way, nobody thinks of having their savings and investment in such digital currencies. Considering this situation, the future of digital currencies may get restricted to being used as an alternative for the credit cards. Beyond that, the usage of alternative digital currencies may not find such growth in future.

• No guidelines on transaction cost and time
When you are dealing with a regular financial transaction through a bank or a registered agency, the transaction time and cost will be regulated by the authorities. If there is any discrepancy in this regard, you can easily approach them and get it resolved in quick time. However, there is no one to monitor the transaction that happens between different individuals when they use alternative digital currencies like bitcoins and litecoins. In this way, you may end up facing many problems in future with regards to your financial transactions.

• It is completely virtual currency and NOT REAL CURRENCY
Remember that digital currencies like bitcoins and litecoins are VIRTUAL CURRENCIES. They are not real and you cannot touch them in your life. Why would anyone want to own such currencies that they cannot hold for future. Everything you own will be online and you will lose them completely if you just forget the pin number for your account. This does not happen with regular currencies and you can still visit the bank and claim your money by proving your identity. The system has not evolved to this level with bitcoins and other digital currencies. This is a major threat for their growth in future.
Implications of Digital Currency on Society
If the level of acceptance for alternative digital currencies increase in a drastic way, it can affect the society in many ways. As of now, we have a different notion of money and it can be stored in our home and we can easily depend on our savings for use in future. In the same way, we can invest them in different assets and they will be accepted all over the world subject to different exchange rates offered by financial institutions. However, all this will change completely with the entry of alternative digital currencies into the mainstream financial market. People will no longer be able to hold them as per their wish and everything needs to be stored online. Considering the fact that millions of people across the world are not educated enough to handle online financial transactions, it can become a difficult task to use them for various transactions.
Implications of Digital Currency on Economy
The growth of alternative digital currencies like bitcoins can have a deep impact on the overall economy of different nations. Many countries are still not prepared to effectively handle online transactions and they will face huge issues with the price fluctuations of such currencies. As there will be no legal guarantee for such currencies, there will be a huge increase in financial disputes between nations that approve and nations that do not approve such digital currencies. As of now, many countries across the world have banned the use of such digital currencies and it becomes difficult have financial transactions with such regions when bitcoins and other currencies are widely accepted by few countries.
Legal Issues with regards to using Digital Currency
The current status of the financial markets is not very secure and you can notice huge scams across the world with regards to leading banks. In this kind of situation, the government can step in to take control of the situation and the common public will not get severely affected with such scams. The system will take over the affected banks and continue to provide service to the customers. However, there is no such monitoring agency for alternative digital currencies like bitcoins. Even if they happen to develop such an authoritative agency to monitor financial transactions for such currencies, they may not be accepted by every country in the world. This can give rise to various legal conflicts and governments will not have any control over the situation. It can become a huge threat for small countries as they will not have any say over the financial transactions.
When you carefully analyze all these issues surrounding alternative digital currencies in the market, you will understand that they have growth in the limited sense in future. It is highly unlikely to replace the regular banking transactions any time in the near future. Also the collapse of one or two alternative digital currencies in the market is enough for people to lose confidence on such currencies. In short, this looks like a ticking time bomb that can explode anytime in future.

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