The banking system of a country is part of the economy of a country. It is the pillar of an economy. People deposit their money safely at a bank. People can transfer money through the banking system. The central bank of a country has the power to issue notes. But in the present situation, the use of paper notes is decreasing due to the invention of virtual notes. The virtual coin is a blessing of modern technology. The virtual banking system has displaced the old banking system. The uses of virtual papers and virtual currencies are increasing rapidly.
Why do people want to invest in the risk-free sectors?
The best risk-free investment is the fixed deposit of a bank. The central bank of a country determines the interest rate of a fixed deposit. After a specific time period, people will get the total amount of the investment at a pre-determined interest rate. In the case of the inflation of a country, the interest rate of the fixed deposit will decrease. But the positive part of the fixed deposit is, there is no fluctuation in the interest rate. Sometimes people also invest in a risk-free mutual funds. Mutual fund is a particular type of financial instrument where people invest their money to reinvest those money in a government organization or some banks. Now a days banks also issue their individual mutual fund for the common people.
Why do people want to take a risk?
People who want to earn more money can take a risk. When there is a high risk, there is a high return from an investment. The return from the cryptocurrency is about 20 times or more than the equity return. That’s why people are taking more risk by investing in cryptocurrency to get a high return. Bitcoin is the most efficient and largest used cryptocurrency. buy and sell cryptocurrency is done through the block chain technology. It is a fully secured virtual trading platform and also maintains the integrity of the data. The return from cryptocurrency mainly depends on the momentum of cryptocurrencies, market capitalization, and market return. Sometimes people purchase bitcoins at a lower price and sell the bitcoins at a higher value. The momentum of cryptocurrency affects the trading of small cryptocurrencies. There is a digital wallet in which bitcoins are stored for trading.
Uses of cryptocurrency are increasing every day due to its high return. Modern people always try to use new technology and take the risk. The modern financial system of a country is trying to improve its money market and capital market. For the development of a country, modern technology is highly required.