Presently, there is at least an emerging discussion on government-backed cryptocurrency. However, there is little practical movement in this area to date. And for many consumers, this creates the challenge of trust. Consumers – particularly those in developed countries – expect their governments to back or guarantee their currency. Without such backing, many are distrustful of an alternative currency and will not embrace it. Yet, governmental support is somewhat contrary to some of the fundamental premises of crypto and the blockchain technology on which it rests. Therefore, barring a breakthrough event or technology, we should likely expect this issue to remain a concern for the foreseeable future.
Consumers need not worry about reporting gains and losses on currency exchanges when using traditional currencies in most countries. Therefore, continuing to use existing currencies to settle debt is more convenient than using crypto and other alternates. Moreover, consumers do not have to worry about burdensome tax reporting issues when they use traditional currencies. For these reasons, the specter of tax reporting will continue to hinder cryptocurrency from becoming mainstream.
Further, you must take appropriate steps to ensure that you never lose access to your digital wallet. The most common issue here is forgetting the password you use to access that wallet. If you lose access, you likely will have permanently lost access to all your cryptocurrency in that wallet! Several estimates indicate approximately 20% of all cryptocurrency is “locked” in wallets that the owners can no longer access.
Several developments could help to reduce a volatility. For example, if a cryptocurrency has “hard assets” backing it, it would likely be less volatile than one with no backing. Likewise, a cryptocurrency backed by a steady government would be more stable than one without such endorsement. In turn, this backing would further ease consumer concerns.
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