THE ROLE OF VIRTUAL CURRENCIES IN FINANCIAL INTEGRATION AND FINANCING ECONOMIC DEVELOPMENT

This paper highlights the economic prospects of pseudonymous payment system (cryptocurrencies), a highly decentralized network of trading and also analyzes its very innovative accounting system, the digital ledger technology also known as the Blockchain Management System (BMS), which makes virtual currencies more convenient, faster and cost-effective over conventional financial institutions like banks and other regulated agencies. The paper also reviews and analyzes the shortcomings of the pseudonymous nature of Bitcoin trading (blockchain) and its related mixing service for users, which makes it very difficult to locate financial crimes or other illicit behaviors. The role of cryptocurrencies in financial inclusion was also tackled. The papers concludes by making a one-on-one comparison of the traditional features of fiat currency with Bitcoin, and also calls on governments to look beyond the flawed nature of virtual currencies , but must work hand in hand to improve the low fee and user friendly payment network that could facilitate a rapid economic development.