In modern society, there are many strong beliefs and emotions tied to physical money, and the ever-growing consumerism that drives spending money, sometimes faster than you can earn it. People used to deposit all the money they had in banks, but due to growth of global population there are vast masses of people who are left without a banking access – and since the recent financial crisis in 2008, people are actually trusting banks having their best interest in mindless and less.
The idea of a decentralized currency not controlled by central banks & governments was being put into action, and Bitcoin was created in 2009. The new types of currencies called cryptocurrencies started appearing one by one, but they were not noticed by the mainstream media until Bitcoin multiplied in price time after time. Bitcoin and other cryptocurrencies are forms of digital assets that can be used as a medium of exchange in various transactions. These cryptocurrencies have started to gain mainstream traction as they are being used for several purposes online, including shopping and playing different games like casino and poker. According to Beasts Of Poker crypto article, online players have a wide variety of services and exchanges for storing their digital assets and transferring crypto.
Let’s take a look at the different reasons that might lead to cryptocurrency is the future form of money:
Money has always evolved into more advanced forms
In the history of technologies used by humans, it’s often useful to take a look at the history of a phenomenon when predicting what will happen in the future. In the case of monetary systems, we first used barter which means trading items for other items. Over 2500 years ago the ancient Chinese people started adopting a new form for trading called cash, and so the first coins were born. Lydia was the first country to start minting gold coins around the same time, and gold coins remained the preferred choice of money up until the 1930s.
The gold standard was ended in 1971 by President Richard Nixon, after which the Fiat money was born. Fiat is a form of money that is not backed by any collateral. Since the last 10 years, we have seen thousands and thousands of different cryptocurrencies, that are based on the technology on which some of the brightest minds & talented coders are working on to make them safer, more decentralized, and more private for users. If you consider how hard it’s moving gold, cash, and sometimes even bits from bank to bank, crypto just seems to be the logical next form of currency in the evolution of money.
Crypto as an advanced form of money is also being adopted by many companies, with giants like IBM and Alibaba filing numerous blockchain-related patents. Additionally, blockchain app stores are being built for banks and many businesses have started offering crypto payments for the goods and services. Even the CEO of NYSE, the world’s largest stock exchange, has claimed that Bitcoin is potentially the first worldwide currency.
Crypto is accessible to everyone with internet access
According to the database World Bank’s Global Financial Inclusion database, 47% of all people in low- and middle-income countries own a bank account. The reasons for being unbanked are presented in the graph below:
While there are certain restrictions for getting banking access, crypto wallets are available to everyone who can access the internet. The vast majority of unbanked masses can much easier open a crypto wallet than a bank account. By doing that, they can either get some type of debit card that works with the crypto wallet or pay with Bitcoin or altcoins in a store that accepts crypto payments.
Any bank or financial institution can pretty easily deny banking services for potential customers that they consider risky. For the 1.7 billion unbanked people in the world, convenience and accessibility will be much better with crypto than traditional banks requiring KYC (Know Your Customer).
On top of ease access, crypto is fast & easy to transfer compared to bank transfers. You cannot transfer money through banks instantly on weekends or public holidays, and the receiver of the transfer cannot be located in a high-risk jurisdiction. For substantial amounts you also need to fill documents for preapproval of the transfer – as you can see, the list of downsides using bank transfers just goes on and on. For crypto transfers, there are pretty much zero restrictions, and coins can be transferred 24/7/365 within a matter of seconds.
Simply put, crypto gives users full freedom to controlling their wealth without regulatory restrictions. The downside to this freedom is the responsibility for storing your own wealth in crypto, which means you cannot make a claim in case your wallet gets hacked or you make a transfer to a wrong address – therefore you should take extra measures of security for storing & transferring cryptocurrencies.
Decentralized vs. centralized
The fiat currencies we use in our everyday lives are based on a centralized monetary system, where everything is controlled, regulated, and backed by the central banks & governments. The implication here is that any decisions made by the central authority controlling a currency can affect the price of the currency negatively or positively – the value of the money used in a country will, therefore, be somewhat controlled by central authorities, and any individual using that currency will be affected by the decisions made by the central authority.
Now the alternative option to centralized money is decentralized money, which many of the cryptocurrencies available today represent. The need for central authority is eliminated in this form of money, and no single authority can dictate the rules of ownership of cryptocurrency. The network used for operating the cryptocurrency consists of computer mining nodes, and some parts of the network going offline will not affect the payment system at all. Neither can someone block the transfer of funds, which certainly can happen if you’re making a bank transfer that your bank doesn’t want to allow?
Cryptocurrencies have a lot of features that the current money system cannot offer for people, and it remains to be seen how wide the adoption of cryptocurrencies will be in the next few coming years. The cryptocurrency was created partly in response to the leading financial intermediaries that causing the vast meltdown of people’s life savings in 2008 – it would certainly be beneficial if crypto could overcome the weaknesses of the current monetary systems!
About the author
Johannes Turunen is a copywriter & entrepreneur who loves creating content that gives people actionable ideas. As a curious & analytical mind exploring new technologies such as cryptocurrencies, he spends most of his time reading and writing articles, but also enjoys meeting new people in the business.
Hackernoon writing profile: https://hackernoon.com/u/JohannesTurunen