Cryptocurrency and blockchain technology seems to have taken over traditional concepts as the new norm. A simple Google search of the two terms yields innumerable results, confirming the level of concern with which they resonate in the current society.
As more people gain an understanding of cryptocurrency and blockchain technology, it is imperative to learn how these two entities are set to change the world around us—for the better. Unlike some ten years ago when they looked unfamiliar and scary to the masses, nearly everyone today is aware of bitcoin, Ether, and other digital currencies that utilize the blockchain technology.
What is cryptocurrency?
Cryptocurrency is digital money created from code, mainly an encrypted chain of data. It is free from governmental oversight and the currency is monitored by peer-to-peer internet protocol. Currently, nearly 1400 digital currencies exist in the market, with Bitcoin taking the lead in terms of market capitalization.
With the growing interest revolving around cryptocurrency and blockchain technology, it is easier to predict where this change is taking the world. The internet, credit cards, and other great revolutions of the time started in like manner. So, what are the major benefits of cryptocurrency and blockchain technology? Read on to find out.
It minimizes fraud
Each cryptocurrency is a digital asset that cannot adhere to counterfeit and reversal schemes by fraudsters. As a sender, you cannot reverse a payment once sent, so there are zero chances of chargeback, unlike credit cards. Cryptocurrency holders are advised to store their assets in a secure digital wallet, which is impenetrable by hacking attempts.
In a universal transaction, such as buying a property, third-party players are often involved, including lawyers, brokers, Notary and more. The long process often leads to delay and increased fees. In the case of cryptocurrency and blockchain technology, a transaction takes place without any intermediary. With an end-to-end encryption facilitated by the blockchain technology, cryptocurrency contracts work faster with lesser fees and no third party approvals compared to traditional asset transfers.
It comes with lower fees
Cryptocurrency exchanges do not require transaction fees. The network automatically rewards the miners. This is a big boost to traders and investors, as money can move from person to another at relatively lower fees. However, third-party services such as Coinbase are equally important in creating and management of digital wallets. Just like PayPal, which works for cash and credit card users, such companies usually charge fees for their services.
No chances of identity theft
Unlike using a credit card in which you divulge your details even in a small transaction, cryptocurrency transactions utilize a “push” mechanism in which a holder is able to send the exact amount to the recipient without providing further information. Credit cards, on the other hand, utilize a “pull” mechanism, in which the store pulls a designated amount from your account, using the information you provide.
Everyone can access it
Currently, the world has 2.2 billion people with access to the internet through various devices. Unfortunately, this lot does not have access to the traditional exchange. These people are ripe for the cryptocurrency and blockchain technology. For instance, one out of every three Kenyans currently owns a bitcoin wallet, according to information gleaned from Kenya’s mobile money transfer system M-Pesa.
Cryptocurrency embraces decentralization
The entire process of cryptocurrency mining and distribution is decentralized. It takes place through a global network of computers that operate on the blockchain technology. Each cryptocurrency is managed by its own network and not by any central authority. Decentralization implies that the network operates on a peer-to-peer basis instead of being manned by a central management body.
Since cryptocurrency does not involve interest rates, transaction charges, exchange rates, or any other third party involvement, it is a universally accepted form of payment. It can be used at international level with no problems. In the end, users are able to save time and money. Being universally accepted makes the transactions easy even at international levels. This is far different from the way other cash systems operate. In such platforms, someone else has an access to your account.
A case in point
For example, PayPal exercises a monopoly on all its users. It can decide to freeze accounts without even consulting the owners. When that happens, it is upon the account owners to follow the necessary channels for possible reinstatement or access to the funds. Cryptocurrency and blockchain technology allows you to own and have full control over your account. Both the private key and the public key that completes your cryptocurrency address belong to you. No one can take such keys from you unless it happens through a web-based wallet.
All the same, digital currencies may not replace credit cards quite soon. It may also take time before they replace the traditional currencies as a tool for global trade. That said, it is true that many people are still unaware of cryptocurrency and blockchain technology. A lot of awareness needs to be done. More businesses need to accept cryptocurrency and blockchain technology in their systems, to come up with strategies that make it easier to sign up and to get started.
The gist of cryptocurrency lies in allowing users to have control over their funds. Coupled with fast, global transactions, lower fees, and zero intermediaries, the system is set to transform the world.
Some downsides of digital currency
Despite all the potential and benefits it offers, cryptocurrency is not without risk. Various notable personalities including Friedman and Ray Dalio have called bitcoin a “bubble.”Jamie Dimon, the CEO of JP Morgan also criticized cryptocurrency that is not supported by the government.
Experts advise that before investing in cryptocurrencies, investors should weigh in various risks such as volatility and regulatory mechanisms.
“Expect continued price volatility…cryptocurrencies represent a new frontier. Therefore, retail investors should expect volatility and significant price swings as markets develop. While cryptocurrencies have experienced explosive growth, they currently remain a relatively small part of the global financial ecosystem. Regulators and policymakers will continue to monitor cryptocurrencies to determine any potential impact on financial stability or broader systemic risk,” says Friedman.
The ultimate goal
The expectation of cryptocurrency and blockchain technology is to allow users to have the ultimate control over their money. You also have control over whom you send your money to, as well as the type of fees you do not have to pay. In short, cryptocurrency is slowly becoming a universal form of online payment because of the attributes it offers.
To dig out more information about cryptocurrency, simply hop online and conduct a search on Bitcoin, Litecoin, Blockchain, Ethereum, or ICO. Industry experts also recommend that people find information from different cryptocurrency and blockchain websites to help them stay updated with the current affairs and developments in the industry.
Which other cryptocurrency and blockchain benefits could you add to this list? Join the conversation over at Telegram (https://t.me/coinstaker)
Images from CoinStaker Library
Tony is a writer for the crypto space. He presents cryptocurrency and blockchain topics to the public in a way that he only can. While carefully researched, this article should not be taken as an express investment guide. Do your own research and consult a financial advisor before you invest in cryptocurrency.