Digital currencies and their impact on global finance have become increasingly relevant topics in recent years. As an IELTS examiner and instructor, I’ve noticed a growing trend of questions related to this subject in Writing Task 2. Based on my research and analysis of past IELTS exams, I predict that this topic will continue to appear frequently in future tests. Let’s explore a sample question and examine how to approach it effectively.
Digital currencies transforming global finance
Analysis of the Task 2 Question
Let’s consider the following question:
Some people believe that digital currencies like Bitcoin will eventually replace traditional money and transform the global financial system. Others think that digital currencies are too risky and unstable to have a significant impact. Discuss both views and give your own opinion.
This question falls under the “discuss both views and give your opinion” category, which is common in IELTS Writing Task 2. It requires you to:
- Explain the perspective that digital currencies will replace traditional money and transform the financial system.
- Discuss the opposing view that digital currencies are too risky and unstable.
- Provide your own opinion on the matter.
Sample Essay 1 (Band 8-9)
In recent years, the rise of digital currencies has sparked a heated debate about their potential to revolutionize the global financial landscape. While some believe that cryptocurrencies like Bitcoin will eventually supplant traditional forms of money, others argue that their inherent volatility makes them too unreliable for widespread adoption. This essay will examine both perspectives before offering a balanced view on this complex issue.
Proponents of digital currencies argue that they offer significant advantages over traditional money. Firstly, cryptocurrencies provide a decentralized financial system that operates independently of government control, potentially reducing corruption and increasing financial inclusivity. Moreover, transactions using digital currencies can be faster and more cost-effective, especially for international transfers. These benefits have led some to predict that cryptocurrencies will eventually become the dominant form of money, transforming the global financial system in the process.
On the other hand, skeptics point to the numerous risks associated with digital currencies. The extreme price volatility of cryptocurrencies makes them unreliable as a store of value or medium of exchange, which are fundamental functions of money. Additionally, the lack of regulation and oversight in the cryptocurrency market has led to numerous scams and fraudulent activities, eroding public trust. Critics argue that these inherent instabilities will prevent digital currencies from achieving widespread adoption and having a significant impact on the global financial system.
In my opinion, while digital currencies have the potential to bring about positive changes in the financial sector, it is unlikely that they will completely replace traditional forms of money in the near future. Instead, I believe we will see a gradual integration of cryptocurrencies into the existing financial system. This hybrid approach could harness the benefits of digital currencies, such as improved transaction efficiency and financial inclusion, while maintaining the stability and security provided by traditional financial institutions and regulatory frameworks.
In conclusion, the impact of digital currencies on global finance is a complex and evolving issue. While they offer exciting possibilities for innovation and improvement in the financial sector, the challenges of volatility and regulation must be addressed. As technology continues to advance, it is likely that we will see a more nuanced integration of digital and traditional currencies, rather than a complete replacement of one by the other.
(Word count: 365)
Analysis of Band 8-9 Essay
This essay demonstrates the qualities of a high-scoring IELTS Writing Task 2 response:
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Task Achievement: The essay fully addresses all parts of the task, discussing both views and providing a clear personal opinion.
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Coherence and Cohesion: The essay is well-organized with clear paragraphing and effective use of cohesive devices.
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Lexical Resource: It uses a wide range of vocabulary accurately and appropriately, including topic-specific terms like “decentralized financial system” and “medium of exchange.”
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Grammatical Range and Accuracy: The essay displays a wide range of complex structures used accurately, with only minor errors.
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Critical Thinking: The response shows depth of analysis and presents a nuanced view of the topic, suggesting a hybrid approach rather than a simple either/or scenario.
Sample Essay 2 (Band 6-7)
These days, digital currencies like Bitcoin are becoming more popular, and people are debating about their impact on the global financial system. Some think they will replace normal money, while others believe they are too risky. This essay will look at both sides and give my opinion.
On one hand, supporters of digital currencies say they have many advantages. They can be used to send money quickly and cheaply around the world, without needing banks. Also, they are not controlled by governments, which some people like. Because of these benefits, some believe that digital currencies will become very important in the future and change how we use money.
However, there are also problems with digital currencies. Their value can change a lot in a short time, which makes them risky to use. For example, the price of Bitcoin has gone up and down a lot in recent years. Also, there have been cases of fraud and hacking in the digital currency world. These issues make some people think that digital currencies are not safe or reliable enough to replace normal money.
In my opinion, digital currencies are interesting and have some good points, but I don’t think they will completely replace traditional money soon. I believe they will become more common and be used alongside normal money. This could bring some benefits, like faster international payments, but we still need to be careful about the risks.
To conclude, digital currencies are changing how we think about money and finance. While they have both advantages and disadvantages, it’s likely that they will become more important in the future. However, they probably won’t replace traditional money completely, but instead work together with it.
(Word count: 295)
Analysis of Band 6-7 Essay
This essay demonstrates the characteristics of a Band 6-7 response:
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Task Achievement: The essay addresses all parts of the task, but the ideas could be more fully developed.
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Coherence and Cohesion: The essay is generally well-organized, but the use of cohesive devices is less sophisticated than in the Band 8-9 essay.
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Lexical Resource: It uses an adequate range of vocabulary, but lacks the precision and sophistication of higher band scores.
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Grammatical Range and Accuracy: The essay uses a mix of simple and complex sentence structures with generally good control, though there are some errors.
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Critical Thinking: The response presents relevant ideas but lacks the depth of analysis seen in higher band essays.
Key Vocabulary to Remember
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Cryptocurrency (noun) /ˌkrɪptəʊˈkʌrənsi/ – a digital currency in which transactions are verified and records maintained by a decentralized system.
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Volatility (noun) /ˌvɒləˈtɪləti/ – liability to change rapidly and unpredictably, especially for the worse.
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Decentralized (adjective) /diːˈsentrəlaɪzd/ – controlled by several local offices or authorities rather than one single one.
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Financial inclusivity (noun phrase) /faɪˈnænʃəl ɪnˌkluːsɪvɪti/ – the availability and equality of opportunities to access financial services.
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Medium of exchange (noun phrase) /ˈmiːdiəm əv ɪksˈtʃeɪndʒ/ – anything generally accepted as representing a standard of value and exchangeable for goods or services.
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Regulatory framework (noun phrase) /ˈregjʊləˌtɔːri ˈfreɪmwɜːk/ – a system of regulations and the means to enforce them, usually established by a government to regulate a specific activity.
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Financial sector (noun phrase) /faɪˈnænʃəl ˈsektə/ – the section of an economy made up of companies that provide financial services to commercial and retail customers.
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Blockchain (noun) /ˈblɒktʃeɪn/ – a system in which a record of transactions made in bitcoin or another cryptocurrency are maintained across several computers that are linked in a peer-to-peer network.
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Fiat currency (noun phrase) /ˈfiːæt ˈkʌrənsi/ – government-issued currency that is not backed by a commodity such as gold.
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Peer-to-peer (adjective) /pɪə tuː pɪə/ – denoting or relating to computer networks in which each computer can act as a server for the others, allowing shared access to files and peripherals without the need for a central server.
Conclusion
The topic of digital currencies and their impact on global finance is likely to remain relevant in IELTS Writing Task 2. To prepare effectively, practice writing essays on related subjects such as:
- The potential benefits and risks of a cashless society
- The role of technology in modernizing financial services
- The impact of globalization on national currencies
- The future of banking in the digital age
- The challenges of regulating new financial technologies
Remember to structure your essays clearly, use a range of vocabulary and grammatical structures, and provide well-reasoned arguments supported by examples. As a practice exercise, try writing your own essay on the sample question provided in this article and share it in the comments section for feedback and discussion.
