A cryptocurrency is defined as a digital currency built with cryptographic protocols that make transactions secure and difficult to forge. The most important feature of a cryptocurrency is that it is not controlled by any central authority: the decentralized nature of the blockchain theoretically makes cryptocurrencies immune to old forms of government control and interference. Cryptocurrencies make it easier to carry out any transaction, since transfers are simplified through the use of public and private keys for security and privacy purposes. These transfers can be made with minimal processing fees, allowing users to avoid the high fees charged by traditional financial institutions. However, the latest cryptocurrency news indicates that devoid of a central repository, a balance of digital cryptocurrencies can be wiped out by a computer failure, hack, and other unexpected events.
Keep reading: What are cryptocurrencies?
The most important characteristic of a cryptocurrency is that it is not controlled by any central authority: the decentralized nature of the blockchain makes cryptocurrencies theoretically immune to old forms of government control and interference.
Cryptocurrencies can be sent directly between two parties through the use of private and public keys. These transfers can be made with minimal processing fees, allowing users to avoid the high fees charged by traditional financial institutions.
Moody’s warns that cryptocurrencies could fragment the payment system
The Investment Service of this agency assured that cryptocurrencies are being used more and more by countries with lower sovereign debt ratings since they can facilitate household transactions and make them faster, more convenient and with lower costs.
Rating agency Moody’s warned that the adoption of cryptocurrencies could lead to excessive fragmentation of the payment system and weaken financial stability, especially in countries with weaker macroeconomic frameworks.
The Investment Service of this agency assured that cryptocurrencies are being used more and more by countries with lower sovereign debt ratings since they can facilitate household transactions and make them faster, more convenient and with lower costs.
In addition, Moody’s points out that cryptocurrencies facilitate inclusion and benefit countries where a large part of the population lacks banking infrastructure, especially with the expansion of the use of mobile telephony and the greater increase in digitization.
However, it warns that “this growing adoption of digital assets also puts macroeconomic stability at risk”
“The risks associated with the adoption of cryptocurrencies could increase macroeconomic instability for sovereign countries with weaker macroeconomic frameworks, particularly where cryptocurrencies can be used to evade capital controls, weakening the effectiveness of policies,” said Moody’s vice president. David Rogovic, quoted in a statement.
Among the risks he cited are operational ones, such as fraud, the reduction of government control in the surveillance of the financial system, the central bank’s less control over the money supply or the greater difficulty of implementing countercyclical monetary policies in times of crisis. .