Cryptocurrency has taken the financial world by storm. The digital assets and blockchain technology is getting a lot of attention in the mainstream as players contemplate integrating crypto. During these uncertain economic times, even the state and local governments are taking note. This aims to bring positive energy as enthusiasts expect growth as concept spread and get acknowledgment across the mainstream. So, is it essential for States and local governments to diversify the way they collect revenue? Here are five reasons why Municipalities should diversify their portfolios for sustainability and should start accepting cryptocurrency payments.
Crypto as a Hedge Against Inflation
The COVID-19 has brought through economic times as industries fall due to financial constrictions. In bailing out, the economic governments have turned to overdrive money printing. The US alone has printed $ 6 billion in the pandemic period. Such money printing habits course inflation hence though the time for the local man.
Crazy money printing means doom for cash holders as economies sink. This becomes a valid reason for municipalities to integrate crypto payments. The supply of most cryptocurrencies is limited meaning that only the specified amount of the digital asset will ever exist. For Bitcoin, for instance, the total supply is capped at 21 million BTC. This means that once the threshold is achieved, no BTC will be produced hence coursing scarcity.
Over time precious metals like Gold and Silver have become valued assets due to scarcity. Bitcoin and other crypto-assets are closely relating to these metals in maters supply and demand. More than $450 billion has been invested in digital assets at the moment. The blockchain continues to attract players across various industries.
Bitcoin is leading the pack commanding slightly over 294 billion dollars of the entire cryptocurrency coin market cap. The value of BTC is above $15500 as per the time of writing this article. This is a 9000% return on investment for those who invested in bitcoin at the initial stage. It is projected that BTC will hit $50,000 and above in a few years. It means that by holding this digitals asset, the local government will be staring at huge feature gains.
Fast and Secure Transactions
Moving on, the transactions on the blockchain are fast, enabling users to transact in the shortest time. Integrating the crypto payment system assures the governments’ effectiveness. Also, it guarantees them security as most of the protocols is built with sophisticated algorithms. The open-source blockchain payment systems also ensure that there is transparency as every transaction is available on the blockchain network.
Fiats are Moving to Blockchain
Several central banks are keen on launching their digital currency on the blockchain. China is leading through its digital yuan. The Chinese central bank recently offered 50000 residents of Shenzhen airdrop worth $1.5 million of digital yuan as it prepares to roll out the cryptocurrency. The UK, Australia, and the European Union are also keen on bringing their currency on the blockchain. By incorporating cryptocurrency, the municipalities will be geared towards the feature of finance.
Increasing Demand for Cryptocurrency
All said the demand for virtual assets is growing as a result of mass adoption. People, mostly the young, are losing confidence in fiat as the word sink into financial uncertainty as to the debt to GDP ratio skyrockets to the moon. Data show that the United States reached 104% in debt to GDP ratio. This has led to an increasing interest by citizens in the failing economies. States are noticing this trend and are moving towards accepting cryptocurrency as the demand for a crypto mode of payment skyrockets. The municipalities and states are at the forefront of diversifying the way of revenue collections.