![]() ![]() The United States government wants to minimize the risks mentioned above without losing the leadership and benefits from this rapidly growing industry. is becoming the industry’s frontrunner in technological innovation, market formation and trading. Furthermore, due to recent severe regulatory policies (e.g., banning crypto asset mining) enforced in countries like China and Russia, the U.S. Why is the White House taking an interest now, and what does this signal?Ĭrypto assets and their markets have seen significant growth in recent years, and the United States has been one of the leading countries in this enterprise. President Biden’s executive order calls for the government to examine the risks and benefits of cryptocurrency assets. As investors recognize the potential benefits of new digital assets, they start using and trading them, which reinforces the popularity and technology adoption. However, one notable observation to help understand this phenomenon is that investing in cryptocurrencies is similar to investing in newly available growth stocks with high potential yet high uncertainty. The growing popularity of cryptocurrency can be attributed to several reasons. However, cryptocurrency’s innovative and new aspects also expose users and investors to excessive price volatility, possible use in criminal activities, potential manipulation by major blockholders, high energy usage for crypto mining and network maintenance, and related environmental risks. Hence, if properly implemented and used, the cryptocurrency market can compete with the incumbent financial technologies. In addition, cryptocurrency can be less manipulated by the government or central authorities. Thus, compared to the traditional money and banking system, cryptocurrencies may be advantageous because of more affordable, more accessible, and faster money transfers and decentralized systems that are more resilient and robust to possible system failures. We use money printed by the government or assets backed by credible financial institutions and firms in economic transactions. In sum, cryptocurrency and the associated decentralized network can create a financial transaction system neither issued nor maintained by a central authority. Blockchain is a distributed ledger, or a book of financial accounts maintained by a disparate network of various individual computers. Related, cryptocurrencies use blockchain technology to implement decentralized networks. Therefore, once people trust this technology and use cryptocurrencies, they can spend and move their wealth via the interconnected network. The technologies behind cryptography make it very difficult to manipulate. What does the average person need to understand about cryptocurrency and why it continues to grow in popularity?Ī cryptocurrency is a digital asset that uses highly encrypted communication protocols regarding financial transactions. Rogers Rainey and Annie Bob Rainey associate professor of banking and finance at Texas A&M University’s Mays Business School, spoke with Texas A&M Today about how the order could impact the future of digital currency and assets and why the government is taking an interest. ![]() The executive order signed by President Joe Biden earlier this month calls on the government to examine the risks and benefits of cryptocurrencies. ![]() The White House has turned its attention toward the cryptocurrency market with the release of an executive order in response to the “dramatic growth” of digital assets. ![]()
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