Financial Management and Digital Currency Assignment

Financial Management and Digital Currency Assignment

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Financial Management: Financial Management and Digital Currency Assignment

Digital currency could help promote financial inclusion and enhance customer security and protection as outlined by Christine Largarde; however, there are a number of risks associated with such an approach. First, the digital currencies tend to be unstable and this presents a major risks to the consumers especially when the value changes before sealing a business deal. When the value of the currency drops in the course of business transaction, then one may have to fork over more than what they had initially set in the budget. The high instability in the currency value could result in a huge loss either to the consumers or the buyers.

Secondly, the use of digital currencies may be limited as some organizations fear accepting such modes of payments due to the instability in its value. The high reluctance among the business operators to accept digital currency can limits one’s ability to purchase goods and services despite having the money.

Furthermore, embracing digital currency also presents with risks associated with human errors. When making a transaction, a slight error such as entering a wrong address could result in a loss. Human beings are prone to errors and thus it may not be possible to eliminate risk associated with entering incorrect payment details during the transaction.

Finally, cyber security is emerging as a serious threat with the digital migration. In the event of cyber-attack, one is likely to incur huge loss with a minimal chance of recovering the lost value. While there are advantages in the adoption of the digital currency, people and business organizations are at high risk of losing their money to the hackers; though, this can be minimized by taking proper and effective precaution measures.

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