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Why are Private Digital Currencies Popular Abroad (Disadvantages of Private Digital Currencies)?

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Why are private digital currencies popular abroad? Why are private digital curr

Why are Private Digital Currencies Popular Abroad (Disadvantages of Private Digital Currencies)?

Why are private digital currencies popular abroad? Why are private digital currencies popular abroad?

Private and decentralized cryptocurrencies are the most popular asset type in the financial sector. With the development of blockchain technology, individuals have ownership of their own data and can trade it without the involvement of governments or other institutions. This means that they can achieve financial freedom by using any cryptocurrency they hold. However, since cryptocurrencies provide anonymity, they cannot be used as a means of exchange like cash. To deposit funds into a bank account for the purpose of transferring money to an overseas account, a trusted third party is needed.

While these cryptocurrencies may not generate economic benefits related to the real world, they could potentially become part of global wealth transfer in the future. However, people can still benefit from them in different ways because they are not controlled by regulatory bodies and are susceptible to money laundering impacts (although many consider this to be unlikely). Therefore, to utilize functionalities such as liquidity, security, and privacy more effectively, investors need to consider how to avoid losses and invest in companies that may not be able to bear substantial risks.

In addition, privately issued digital tokens can also generate income through intermediaries. For example, Jeremy Allaire, CEO of international remittance company Circle, stated, “We are looking for a way for customers to pay directly to their savings banks.” He added,” I believe we will soon launch a new stablecoin based on the US dollar. We will start offering services to users…they will automatically complete payments when they receive small amounts”. Why are private digital tokens popular abroad?

In the UK, a special group has been established by the central bank to explore the establishment of CBDC and conduct commercial activities in the EU. The team also raised two questions: whether private digital currencies should be allowed as legal tender for cross-border payments, and how Bitcoin and other cryptocurrencies can be used for everyday purposes.

According to legal requirements, the following three conditions must be met: 1. Obtaining a license, that is, “acceptance” and “benefit,” otherwise, one does not possess such qualifications or requirements. 2. Compliance with anti-money laundering regulations (such as the Bank Secrecy Act, which imposes certain obligations), including but not limited to AML/CTF standards. 3. Compliance with relevant national regulations or applicable legislative norms. 4. Needs to comply with EU regulations (including the European Securities and Markets Authority). 5. Compliance with the U.S. ban on virtual asset services. 6. Comply with local laws. 7. Comply with rules specified by the Federal Financial Supervisory Authority. 8. Fulfill Anti-Corruption Enforcement Act. 9. Violation of Securities Act 10 and other sanctions measures. 2. Suspected of the crime of illegal foreign exchange sales. 11. Violation of regulations on illegal business operations. 12. Unauthorized participation in terrorist financing. 13. Tax evasion. 16. Fraud. 18. Money laundering. 17. Telecommunications fraud. 19. Online gambling. 20, and others.

Disadvantages of Private Digital Currencies

According to coindesk, the disadvantages of private digital currencies lie in their slow speed and lack of security. The first reason is due to the lack of regulatory control over cryptographic technology, which hinders its widespread adoption. The second reason is that it has issues in certain aspects. For example, when governments announce the prohibition of all services related to Bitcoin, Ethereum, or Ripple, their transactions may become expensive and difficult to trace; if governments decide to shut down any services using digital assets; if private companies refuse to send payments to users and stop transactions, it could cause system paralysis; therefore, once these services disappear, they lose all value and may face losses.

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