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In recent months, the buzz around cryptocurrencies has gone up significantly worldwide. As per research, crypto transaction volumes touched almost $3 billion in the first half of 2021, with Bitcoin being the favoured choice. The increase in numbers isn’t surprising. There has been a 200% rise in transaction rates compared to last year.
So, what is the reason behind this sudden rise and interest in crypto transactions? Are there any advantages of switching to cryptos from traditional fiat currencies? Well, the most common reasons are:
- Crypto payments or transactions have the potential to create a more globalized economy.
- They also provide fast and secure financial services without interventions from 3rd parties.
Before getting into an in-depth analysis, let’s get to know how crypto transactions work.
Crypto wallets and transactions
A cryptocurrency wallet is a storage facility that allows you to store digital currency. Generally, these currencies are transferred from one’s holdings to a public address in a crypto-economy. You can either opt for a cold wallet or a hot wallet. Generally, cold storage wallets are deemed safer because they store the private key offline, making it impossible to hack.
A user can access these funds with the unique private key they possess. When the transaction involves the buying or selling of goods and services, the buyer will transfer their digital currencies to the seller’s digital address. Using a crypto wallet eliminates several charges, like the ones levied by a bank. So, transactions and trading is made easier with these wallets.
Cryptocurrencies can also be transferred using exchanges. A cryptocurrency exchange is a platform where you can buy, trade, or sell virtual currencies. You can purchase cryptocurrencies with fiat currencies on an exchange platform. These currencies can also be transferred from one exchange to another – into a particular account where you want them to be deposited.
The rise in Cryptocurrency transactions
Pushing Bitcoin back, Ethereum has continued to grow tremendously in terms of transaction volume. While Bitcoin faced a fall of 14% in the gap between Q1 and Q2 of 2021, Ethereum’s trading volume rose about 53%. The interest in crypto-related assets is not just expressed by customers but also by retail outlets and institutions.
Similarly, in Europe and America, virtual currencies are gaining popularity and acceptance as a method of payment. The findings of a recent survey stated that there had been a significant boost in crypto awareness and ownership in the UK. The global transaction volume spiked by 32%, with Asia leading the race.
Recently, there has been a substantial rise in cryptocurrency transaction volumes. It has been estimated that, just in the first six months of 2021, the transactions and payments made through digital currencies have peaked at 3 billion USD, with Bitcoin remaining as the favoured crypto.
The given chart shows the number of daily transactions that have taken place in Bitcoin and other virtual currencies between January 2017 and July 2021. From analyzing the above chart, it is clear that the number of cryptocurrency transactions per day is rising at exceptional rates.
The sudden spike in the last few years can be attributed to the fact that several companies, businesses, merchants, and retail chains are starting to embrace digital currencies.
Companies like PayPal, Tesla, and Xbox recognize and accept payments in crypto; people are more intrigued about these complex currencies. There has also been speculation about the e-commerce giant Amazon expanding its venture and accepting payments in certain digital currencies.
In addition, many nations are keen on creating laws and regulations that will keep the operations of virtual currencies transparent and problem-free.
Crypto transactions and the Indian market
The Hindu BusinessLine reported in March 2021 that the cryptocurrency transactions in the previous years have shot up by a significant rate of 30%. The pandemic has piqued people’s curiosity about the crypto market. The younger generation is keen on keeping up with the latest trends in investment vehicles, and cryptocurrency has caught the eye of many.
Even though there have been several legal struggles regarding the regulation of cryptocurrencies in India, the nation’s interest and investments in the crypto market has been calculated to be around 10 million. Bitcoin, Ripple, Tether, and Tron are the leading ones among the cryptocurrency races in India.
Why choose to make transactions with Cryptocurrencies?
Compared to the transactions done with fiat currencies, cryptocurrencies offer a user numerous benefits, which include:
- The transactions are pseudonymous. That means it is tough to trace your transaction without the particular blockchain ID.
- The system is primarily peer-to-peer – there is no involvement of a third party.
- Crypto payments are easy to make – you can trade and be involved in transactions from anywhere at any time.
- With proper security, these transactions are highly safe and almost theft-free. The details of a transaction are completely secure from prying eyes.
- Even for international payments, the transaction fees are low. You also need not pay several other fees as you do in a bank.
- The user has autonomy when it comes to their currencies – digital currencies are not linked to a central authority, so the user is the one who is in control of their asset.
Investing in Cryptocurrencies
The advantage of investing in digital currencies is that you can expect high returns (with relevant risks attached). Unlike the traditional investment methods, it also offers the safety of anonymity. One can find several online trading platforms, markets, exchanges, etc., where you can trade in virtual currencies with ease.
A person investing in digital currencies should be aware of their risks and hazards. If you are clever and cautious, you can make unimaginable returns with cryptocurrencies.
Switching to cryptocurrencies is a great option now – there is so much potential for the growth of this concept. Statistics and charts show how Bitcoin has been struggling in the past few months. Despite this, the overall crypto payment and transaction volumes have seen a significant climb.
As we have seen, Ethereum is filling the void that Bitcoin seems to leave, and we will have to wait and see what trends this change will bring to the market.
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
