Digital currencies have become a hot topic in recent years, and their impact on international transactions is a subject that has appeared in IELTS Writing Task 2 questions. Based on trend analysis and recent exam reports, this topic is likely to continue appearing in future tests. Let’s explore a relevant question and provide sample essays for different band scores.
Some people believe that digital currencies will revolutionize international transactions, while others think they pose significant risks. Discuss both views and give your own opinion.
Analysis of the Question
This question requires candidates to:
- Discuss the potential benefits of digital currencies in international transactions
- Explore the risks associated with digital currencies
- Provide a personal opinion on the matter
It’s crucial to address all parts of the question and maintain a balanced approach throughout the essay.
Sample Essay for Band 8-9
Digital currencies, such as Bitcoin and Ethereum, have gained significant attention in recent years, sparking debates about their potential to transform international transactions. While some argue that these currencies will revolutionize cross-border payments, others express concerns about the risks they present. This essay will examine both perspectives before offering a balanced view on the matter.
Proponents of digital currencies argue that they could streamline international transactions by eliminating intermediaries and reducing costs. Traditional bank transfers often involve multiple parties and can take several days to complete, incurring substantial fees in the process. In contrast, digital currencies enable near-instantaneous transfers with minimal transaction costs, potentially revolutionizing remittances and international trade. Moreover, blockchain technology, which underpins most digital currencies, offers enhanced transparency and security, potentially reducing fraud and errors in cross-border transactions.
However, critics raise valid concerns about the risks associated with digital currencies. The volatility of their value poses a significant challenge, as dramatic price fluctuations can lead to substantial financial losses for individuals and businesses alike. Additionally, the lack of centralized control and regulation makes digital currencies vulnerable to manipulation and use in illicit activities, such as money laundering and tax evasion. Furthermore, the energy-intensive nature of mining some cryptocurrencies raises environmental concerns, potentially offsetting any efficiency gains in transaction processing.
Digital currencies transforming global financial landscape
In my opinion, while digital currencies have the potential to revolutionize international transactions, their widespread adoption faces significant hurdles. The impact of cryptocurrency on international investments cannot be ignored, as it offers new opportunities for global capital flows. However, for digital currencies to truly transform cross-border payments, robust regulatory frameworks and technological improvements are necessary to address current risks and challenges. As these issues are gradually resolved, we may see a gradual integration of digital currencies into the global financial system, complementing rather than entirely replacing traditional methods.
In conclusion, digital currencies present both promising opportunities and notable risks in the realm of international transactions. While they offer the potential for faster, cheaper, and more transparent cross-border payments, concerns about volatility, security, and regulation must be addressed. The future of international transactions likely lies in a balanced approach that harnesses the benefits of digital currencies while mitigating their associated risks.
(Word count: 398)
Sample Essay for Band 6-7
In recent years, digital currencies have become more popular, and people are discussing how they might change international transactions. Some think these currencies will make big improvements, while others worry about the dangers. This essay will look at both sides and give my opinion.
On the positive side, digital currencies could make international money transfers much easier and cheaper. Right now, sending money to another country can be slow and expensive because banks charge high fees. With digital currencies like Bitcoin, people can send money quickly and with lower costs. This could be very helpful for people who need to send money to family in other countries. Also, digital currencies use special technology called blockchain, which some say is more secure than traditional banking systems.
However, there are also risks to consider. One big problem is that the value of digital currencies can change a lot in a short time. This means people might lose money if they use these currencies for international transactions. Another worry is that digital currencies are not controlled by governments, which could make it easier for criminals to use them for illegal activities. Some people also say that mining cryptocurrencies uses too much energy, which is bad for the environment.
In my opinion, digital currencies have both good and bad points when it comes to international transactions. I think they could be useful for making some types of payments easier, but there need to be better rules and safety measures before they can be used widely. The role of digital currencies in the future of banking is likely to grow, but it will take time for them to become a normal part of international finance.
To conclude, digital currencies might change how we make international transactions, but there are still problems to solve. While they offer faster and cheaper ways to send money abroad, we need to be careful about the risks. In the future, we might see a mix of traditional banking and digital currencies for international transactions.
(Word count: 368)
Explanation of Band Scores
Band 8-9 Essay
This essay demonstrates the following characteristics of a high band score:
- Fully addresses all parts of the task with a well-developed response
- Presents a clear position throughout the essay
- Uses a wide range of vocabulary with very natural and sophisticated control
- Uses a wide range of structures with full flexibility and accuracy
- Cohesive devices are used effectively to sequence ideas
- Demonstrates awareness of style and collocation
Band 6-7 Essay
This essay shows the following features of a mid-range band score:
- Addresses all parts of the task, although some parts may be more fully covered than others
- Presents a relevant position, although the conclusions may become unclear or repetitive
- Uses an adequate range of vocabulary for the task, with some errors in word choice and collocation
- Uses a mix of simple and complex sentence forms
- Has some errors in grammar and punctuation, but they do not impede communication
- Uses cohesive devices, but not always appropriately or accurately
Key Vocabulary to Remember
- Digital currencies (n.) /ˈdɪdʒɪtl ˈkʌrənsiz/ – Forms of currency that only exist electronically
- Revolutionize (v.) /ˌrevəˈluːʃənaɪz/ – To change something completely and fundamentally
- Cross-border payments (n.) /krɒs ˈbɔːdə ˈpeɪmənts/ – Financial transactions where the payer and the recipient are based in different countries
- Blockchain (n.) /ˈblɒktʃeɪn/ – A system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system
- Volatility (n.) /ˌvɒləˈtɪləti/ – The tendency to change quickly and unpredictably, especially for the worse
- Remittances (n.) /rɪˈmɪtənsɪz/ – Sums of money sent in payment or as a gift
- Cryptocurrency (n.) /ˈkrɪptəʊˌkʌrənsi/ – A digital currency in which transactions are verified and records maintained by a decentralized system
- Money laundering (n.) /ˈmʌni ˈlɔːndərɪŋ/ – The concealment of the origins of illegally obtained money
- Regulatory framework (n.) /ˈreɡjələtəri ˈfreɪmwɜːk/ – A system of regulations and the means to enforce them
- Intermediaries (n.) /ˌɪntəˈmiːdiəriz/ – Entities that act as a mediator between different parties
Conclusion
The impact of digital currencies on international transactions is a complex and evolving topic that is likely to appear in future IELTS Writing Task 2 questions. To prepare for this and similar topics, candidates should:
- Stay informed about the latest developments in digital currencies and their global impact
- Practice writing balanced arguments that consider multiple perspectives
- Develop a range of relevant vocabulary and use it accurately in context
- Work on structuring essays clearly with appropriate use of cohesive devices
For further practice, consider writing essays on related topics such as:
- The role of cryptocurrency in developing economies
- The potential impact of central bank digital currencies on international trade
- The challenges of regulating digital currencies in a global economy
We encourage you to practice writing an essay on the given topic and share it in the comments section for feedback and discussion. This active engagement will help you improve your writing skills and prepare effectively for the IELTS Writing Task 2.