Central Banking System vs Cryptocurrency

Money has been a part of human history for at least 3,000 years, in some different forms. Historians largely agree that bartering was undoubtedly used before that period. For example, a farmer might barter a bushel of wheat for a pair of shoes from a shoemaker. These plans, however, take time to complete. Over the years, a sort of currency emerged, based on easily exchanged goods such as animal skins, salt, and swords. These exchanged goods were used as a form of currency (even though the value of each of these items was still negotiable in many cases). This trading system extended throughout the world, and it is still in use in some parts of the world today. Around 770 B.C., the Chinese switched from using actual useable objects as a medium of exchange to using miniature reproductions of these same objects cast in bronze. Although China was the first country to employ an artifact that modern people would identify as a coin, Europe's Lydia area was the first to use an industrial facility to create coins that could be used as cash (now western Turkey). This type of facility is now known as a mint, and minting is the process of manufacturing currency in this manner. Lydia's King Alyattes issued the first formal coinage around 600 B.C. The coins were made of electrum, a naturally occurring alloy of silver and gold, and were embossed with images that served as denominations. The Chinese switched from coins to paper money around 700 B.C. By the time Marco Polo a Venetian merchant, explorer, and writer who traveled through Asia along the Silk Road between the years of A.D., arrived in China, the Silk Road had become a major trade route. In the years 1271 and 1295, two European explorers paid for a journey to China. In 1271, China's ruler had a firm grip on both the money supply and the various denominations.

Mobile payments and virtual currency are two new types of currency that have emerged in the twenty-first century. Mobile payments are made using a portable electronic device such as a cell phone, smartphone, or tablet to pay for a product or service. Money can be sent to friends and family members via mobile payment technologies. WeChat pay, Apple Pay and Google Pay are increasingly fighting for shops to use their platforms for point-of-sale payments. The pseudonymous Satoshi Nakamoto published Bitcoin in 2009, and it swiftly became the de facto standard for virtual currency. There are no real coins in virtual currencies. The attractiveness of virtual money is that it promises reduced transaction fees than standard online payment channels, and unlike government-issued currencies, virtual currencies are managed by a decentralized authority.

Central banking system

Even though the United States Federal Reserve was founded in 1913, the concept of central banking was not groundbreaking at the time. The Federal Reserve's relatively complex structure is one of the reasons it has been a central figure in a slew of conspiracy theories, the majority of which portray the establishment as a forceful governing body whose sole purpose is to keep those in power in power. However, the truth is not as simple as many people believe. Central banking is a term for centralized banking. Centralized Online Real-Time Exchange is an acronym for Centralized Online Real-time Exchange. This banking, by definition, is a centralized system built by a bank that allows its customers to transact business regardless of the bank's location. As a result, geo-specific transactions are no longer an issue. Customers can access their bank accounts and complete basic activities from any of the member branch offices through central banking, which is a banking service provided by a collection of networked bank branches. Retail banking is frequently associated with banking, and many banks treat their retail customers as central banking clients. The institution's Corporate Banking division is normally in charge of managing businesses. The basic depositing and lending of money are covered by core banking. Transaction accounts, loans, mortgages, and payments will be among the core banking services. Banks provide these services through a variety of channels, including automated teller machines, Internet banking, mobile banking, and branch locations. Banking software and network technology allow a bank to centralize its record-keeping and allow access from any location.

Here are some drawbacks of the central banking system;

·       During the weekend, banks are typically closed. As a result, when customers plan to execute important transactions on weekends and holidays, they generally run into a slew of issues. To execute large transactions, banks also demand people's physical appearance, which takes too much time.

·       Traditional banking systems market their services in a variety of ways. They set aside some projects for select groups of people that are not open to the general public. Soft loans, longer payment terms, and cheaper interest rates are all available to these populations.

·        Many mobile banking apps can be hacked by skilled specialists, making the systems unfair and barren of financial inclusion. As a result, some customers lose a significant amount of money from their accounts. Fraud and money embezzlement are also possible with these methods. These situations could lead to the loss of hard-earned funds.

·       During transaction periods, banks charge additional fees and taxes. During international transfers, for example, sending and receiving institutions may charge exorbitant transaction fees and taxes.

·        Bank transactions and financial services are subject to biases since they rely on account numbers and names, which take a long time due to slow protocols. In the event of a disagreement with bank authorities, the financial service issuing officer can purposefully delay transactions.

Cryptocurrency

Many different types of cryptocurrencies are based on the same decentralized technology known as the blockchain. Blockchain is a distributed network of computer servers called nodes that uses advanced cryptography and distributed ledger technology to allow any digital transaction to be recorded transparently and verifiably by anyone. Nodes are incentivized to support the network by being rewarded with new coins and/or transactional fees. Before the development of blockchain, specifically Bitcoin, Internet commerce relied on financial institutions to act as trusted third-party intermediaries between merchants and consumers, resulting in "inherent weaknesses" such as transaction non-reversibility (because third parties cannot avoid mediating disputes), increased transactional costs (due to third-party involvement), and excessive collection and storage of a customer's personal information. In the meantime, without a trusted third-party intermediary, electronic transactions remained troublesome before Bitcoin's development. Bitcoin's key innovation is that it allows a payment system to operate without a trusted third-party intermediary in a decentralized manner by publishing all transactions on a distributed ledger. This effectively eliminates security breaches because transactions are "publicly announced" in a P2P system where consensus is required in determining the order and verification of payments. Although it is most commonly associated with Bitcoin and payment systems, blockchain encompasses a wide range of systems ranging from fully open to fully private and has the potential to revolutionize record-keeping for a wide range of applications, including smart contracts, smart property, multi-signature software, and many others.

If I come to write advantages of cryptocurrency, which are several, here I have mentioned some prominent features.

·       The majority of traditional financial markets are closed at night, on weekends, and on holidays. Crypto markets, on the other hand, are open for business 24 hours a day, seven days a week. A power outage, internet outage, or centralized exchange outage are some of the only things that could prevent a person from trading cryptocurrency.

·       While immutability is an important criterion for the DeFi landscape to ensure security, transparency is also a popular feature among DeFi pros. Decentralization, of course, means more transparency, and the distributed ledger keeps track of everything that happens on the blockchain network. The cryptographic principles of blockchain also ensure that information is only documented when it has been verified as valid. The benefits and drawbacks of DeFi highlight how customers can benefit from DeFi apps' transparency.

·       Crypto transactions are simple, low-cost, and more private than most other types of transactions. Anyone can send and receive a variety of cryptocurrencies using a simple smartphone app, hardware wallet, or exchange wallet. Bitcoin, Litecoin, and Ethereum, among other cryptocurrencies, can be purchased with cash at a Bitcoin ATM. It is not necessarily necessary to have a bank account to use cryptocurrency. Someone may use cash to purchase bitcoin at an ATM and then send the currency to their phone. One of the most significant advantages of cryptocurrencies may be that it provides access to people who do not have access to regular financial systems.

·       Decentralized cryptocurrencies are secure forms of payment because they are based on cryptography and blockchain security. One of the most certain advantages of cryptocurrencies might be this. The hash rate is a big factor in crypto security. The more computer power required to breach the network, the greater the hash rate. By far the most secure cryptocurrency, Bitcoin has the highest hash rate of any network. Using a crypto exchange, on the other hand, is only as safe as the exchange itself. The majority of crypto hacking cases involve exchanges or individuals making mistakes.

·       While some people are simply interested in investing in cryptocurrencies for the sake of profit, others may gain from the potential to use them as a medium of exchange. Transactions in Bitcoin and Ether could cost anywhere from a few cents to several dollars or more. Litecoin, XRP, and other cryptocurrencies can be transmitted for cents or less. Most crypto payments are settled in seconds or minutes. Bank wire transfers can be much more expensive and take three to five business days to complete.

·       The cryptocurrency sector has been one of the most rapidly growing markets in most of our lifetimes. Working with firms on the cutting edge of the internet in the 1990s and early 2000s may be compared to working with companies on the cutting edge of the internet now. In 2013, the total market capitalization of the cryptocurrency market was around $1.6 billion. It had risen to over $1.4 trillion by June 2021.

·       Cryptocurrencies that can be mined and have a finite supply cap, such as Bitcoin, Litecoin, and Monero, to mention a few, are regarded to be good inflation hedges. Because monetary inflation occurs when central banks and governments print more money, increasing the supply, scarcer items appreciate. Because more and more fresh dollars are pursuing fewer and fewer coins, the price of these fixed-supply coins, measured in dollars, is more likely to rise. Furthermore, regardless of what happens with monetary policy, the Bitcoin protocol, for example, is designed to keep those coins scarce.

·       Cryptocurrencies are unconcerned about national boundaries. Without any additional difficulties, a person in one country can transmit coins to someone in another country. Getting money across international borders through typical financial institutions can take a long time and cost a lot of money. Due to legislation, sanctions, or hostilities between individual countries, this may not be possible in some circumstances.

·       Cryptocurrency may be used to trade value between two parties, which is one of its greatest advantages. This can be done without the involvement of a third party, making the transaction more open and resistant to censorship. For whatever reason, banks or other payment processors might refuse to provide services to anyone. For certain journalists, political dissidents, and others working in countries with oppressive authoritarian regimes, this can be tough. Because Bitcoin and most other cryptocurrencies are governed by no central authority, it is extremely impossible to prevent anyone from using them.

Why is cryptocurrency banned in some countries?

It is the only and main concern that cryptocurrencies make it easier for fraudsters to hide the source of their earnings, and they're fast becoming the favored currency of cybercriminals, from buying illicit items with Bitcoin to demanding Bitcoin payments in ransomware assaults. This movement is gaining traction because cryptocurrency combines anonymity, the convenience of use, and the capacity to avoid international boundaries and restrictions, allowing ill-gotten gains to be laundered.

Because of the increasingly complex money laundering strategies, authorities are continuously confronted with new challenges in their investigations. Money laundering is at the heart of every cryptocurrency crime, as it allows criminals to move monies obtained through other means onto the blockchain. Cryptocurrency gains can't be held or changed to fiat cash without being detected by law authorities because they can't be laundered. To combat criminals and terrorists who launder money and thwart crypto crime, law enforcement and security organizations need an advanced blockchain analytics solution.

Crypto experts frequently suggest that laundering money with cryptocurrencies is extremely difficult and risky, making it a less effective strategy than traditional methods. They also believe that digital currency transactions are more transparent and accountable than fiat currency transactions. Another argument is that money laundering using cryptocurrencies is relatively minor in terms of scale and that the mainstream media is focused more on criminal acts involving digital currencies than on technology and innovation. There is no doubt that cryptocurrencies are being used to enable money laundering, albeit on a modest scale. In the digital era, cryptocurrency's status as a mainstream vehicle of value exchange is progressively shifting. Many significant enterprises now accept digital currency for product and service payments, and many institutions are considering blockchain technology implementation. As a result, Bitcoin has the potential to completely replace its paper and plastic counterparts. As a result, it's critical to investigate the flaws that allow digital currencies to be exploited for money laundering and to build appropriate counter-measures to counteract the crime.

MEMO framework for Crypto storage

One of the most crucial things to consider while owning bitcoin is how to keep it. Cryptocurrency is not protected in the same way that money in a bank account or investments made through a broker are. Crypto storage is your obligation as the owner. If you lose access to your cryptocurrency, it's likely gone forever. This is a pretty prevalent problem that has existed since Bitcoin's inception. 3.7 million Bitcoins are thought to have been lost forever. The other point is what is the size of the Bitcoin blockchain? The data collection has grown at an exponential rate since 2014, with megabytes increasing by approximately one gigabyte every few days. The bitcoin blockchain is a distributed database that maintains a constantly growing and tamper-evident ledger of all Bitcoin transactions and records since its inception in January 2009.

So to counter the above two concerns MEMO provides a decentralized blockchain-based storage system, that is fit from all aspects to store cryptocurrency securely and forever. With the three roles and smart contracts as an incentive mechanism, MEMO develops a full incentive and constraint mechanism. This can efficiently maintain the system's ecological equilibrium. The off-chain mode of the MEMO mechanism is completed in seconds and can be validated. Its quick verification is not because it is off-chain. The answer is in a new publicly auditable BLS-based signature approach that offers privacy, batch auditing, completeness, and high efficiency. MEMO introduces RAFI, a risk-aware failure identification technique for erasure-coded data centers that simultaneously improves data reliability, availability, and serviceability (RAS). The core concept behind RAFI is to identify a chunk failure not only by its time but also by the data dependability and availability of its host stripe. It significantly improves data recovery and becomes MEMO Decentralized Cloud Storage's primary benefit. MEMO has formed a strategic partnership with Harmony, Ethereum, and Metis to provide on-chain data storage services. MEMO has created an interface for partners to use to make it easier for developers and validated nodes to store and access historical data.