Why Cryptocurrency May Become Your New Currency

Even with as much attention as cryptocurrency has received over the past few
years, there is still a pretty hefty segment of the population that doesn’t
quite understand what they do. For some, there is a built-in confusion with the
technological aspect, or perhaps they don’t make the effort to learn because
they feel it might be too complex. Others might actually have an idea about the
coins that is incorrect, perhaps spurred on by some false information spread by
detractors.

Cryptocurrency can certainly do a lot of things, especially considering how
versatile the blockchain technology on which it is built can be. Perhaps more
than any other characteristic, cryptocurrency has the ability to be a kind of
alternative currency from what you have been accustomed to for your whole life.
Not only is it an alternative, but it is also a choice that can actually improve
upon the status quo.

Although cryptocurrency has come a long way since its infancy, there is still
a lot of room for it to grow. If you think that the fad has passed you by or
that you might be too late to get involved with cryptocurrency on a meaningful
level, you might be off-base. By learning about how this combination of
technological advance and financial game-changer works to replace traditional
currency, you can eliminate the mystique and get to the core of what makes
cryptocurrency so special.

How Traditional Money Works

You have probably been using traditional currency for so long that you
haven’t really stopped to think about the conditions under which it is utilized
by the public. More than anything, traditional currency, also known as fiat
currency when referring to physical manifestations of money, is a tool of the
governments that produce it. The supply of the currency is controlled and
manipulated by the country in question for their purposes, many of which are
often antagonistic to the needs of their citizens.

There is also the fact that these currencies don’t travel very well. When you
try to spend money in other countries, you generally have to convert into the
fiat currency of those countries before you can proceed. That also means that
you are subject to exchange rates, which can change the value of your currency,
again due to forces beyond your control.

On top of all that, there are the institutions that you have to engage just
to make simple transactions. Banks are at the epicenter of most financial doings
by the average person, and they often attach fees to their services. In
addition, they can make decisions regarding your money, such as freezing your
account, for which you have no recourse.

For most of the modern era, people have just assumed that these conditions
are just part and parcel of life. Short of withdrawing your money and caring for
it yourself, there really was no way around it. But a group of developers
connected by the internet began to ponder if there was any way to create a
currency that would do an end run around governments and banks and could belong
solely to the people.

Bitcoin as Alternate Currency

The solution that this mysterious group reached, which was announced to the
world via a white paper
published under a pseudonym, was called Bitcoin, the world’s first
cryptocurrency. The idea behind cryptocurrency was that it would be a currency
that would be decentralized, meaning that there was no controlling body, be it a
government or a bank, in charge of it. On top of that, Bitcoin was set up so
that it could be transferred in”peer-to-peer” fashion, meaning that it could be
passed from one regular person to the next with nothing in between to interrupt,
slow the transaction down, or impose fees upon it.

The way that it did this was by employing technology known as the blockchain.
The blockchain enables people to conduct transactions over a network that is
unfettered by any third party. A group of”miners” validates the transactions by
solving cryptographic problems, their proof of work being necessary so that
there can’t be any fraud, charge-back, or anything that might be associated with
traditional internet transactions.

While it’s hard to say for sure if that group was trying to create some sort
of financial revolution or if they were just attempting to solve a theoretical
problem, the Bitcoin movement, which also launched cryptocurrency, soon started
to gain steam. And it happened in more ways than one might have imagined.

How Cryptocurrency Improves Upon Traditional Currency

Once people got a hold of cryptocurrency, it became clear that there were
many practical uses for it. The blockchain really could be employed in any
situation where there would be a third party in the way. But for the sake of the
discussion about alternative currency, it soon became clear that Bitcoin and its
imitators could boast of a bevy of advantages over their traditional fiat
competitors.

Opening Up the World

As stated above, traditional money can’t really be used in another country
without the user first jumping through some hoops. With cryptocurrency, those
hassles are largely taken out of the equation. It is a peer-to-peer network, and
there is really no limitation to the peers in question as long as they have the
capability to deal in cryptocurrency.

That capability depends on two things. First, they need to have an internet
connection. Second, they need a digital wallet.

As you might imagine, that brings a lot of far-flung places of the world into
play in terms of possible cryptocurrency partners. There are many locations that
are nowhere near a bank or anything similar, making a traditional financial
account for people in that vicinity unlikely. But cryptocurrency brings them the
opportunity to get involved on the same level as someone coming from a hub of
activity.

In an era where people are often divided by all kinds of barriers, the way
that cryptocurrency opens up the world is one of its best advantages. Small
businesses, in particular, can go global in a heartbeat by using cryptocurrency.

Getting Rid of the Middleman

When we say middleman here, we are referring to the banks and credit card
companies and other financial entities that tend to have a say in practically
every aspect of personal finance. What they bring to the table for the
individual is some sense of security, for sure. But they also impose fees, slow
things down, and arbitrarily make decisions about the money that you’ve
entrusted to them.

By using cryptocurrency, a person can bypass a lot of those hassles. They can
also leave behind the concerns over their personal information. Anytime you use
a bank card or a credit card, you are at great risk of losing vital data to
criminals.

Even if the institution holding your money faces theft or cyber-attack, your
information will be up for grabs. But none of that is a concern when using
cryptocurrency. That’s because cryptocurrency doesn’t sacrifice any more
information than what it needed to complete the transaction.

For example, if you are buying something worth five dollars in American money
and do so by using a fraction of a cryptocurrency such as Bitcoin, only the data
involving that five dollars changes hands. Your whole account doesn’t go to the
receiving party or the party helping the transaction go through. Neither does
any personal data, unless the cryptocurrency network in question requires it of
you.

Other Advantages of Cryptocurrency

If it seems like time and money are two of the hardest things for you to save
in your life, you’ll be happy with cryptocurrency. The fees that are impossible
to avoid when using things like bank cards or credit cards are largely absent
from cryptocurrency. In addition, the long wait times to see the money paid to
you actually make it into your account are also brought down to the absolute
minimum by the relatively instant settlement process available with
cryptocurrency.

Other than that, cryptocurrency also is easy to use, even for those who may
not understand the technology. Basically, if you’ve dealt with a smartphone and
passwords for websites, you have the technical know-how to make a cryptocurrency
trade. All it takes is a digital wallet, which could be a downloadable one
connected to the internet if you plan to use the digital coins often, or a
hardware wallet that offers the best protection for the coins you have.

The Investment Aspect of Cryptocurrency

That’s because the coins are limited to a certain amount and only have their supply
raised a tiny bit with each transaction processed. As a result, the fluctuating
demand for the coins often causes them to rise or fall.

This can be disconcerting for some people, as they like to have some sort of
stability in their monetary supply. But the possibility that the prices of the
coins could soar gives an extra layer of promise to a cryptocurrency
transaction. Considering where the prices are today compared to where they were
when the coins first were created, that promise has been realized for many early
adopters who became quite rich from possessing the coins.

Why Cryptocurrency Hasn’t Yet Supplanted Traditional Money

If cryptocurrency has all of these things going for it, one who didn’t know
any better might have expected that they would have already wiped fiat money
right off the map. But that is far from the case. In fact, cryptocurrency still
has plenty of hurdles to overcome before it can be considered anywhere near on
par with traditional currency in terms of popularity. Here are some of those
major obstacles.

Not Enough Places to Spend

In an ideal future for cryptocurrency, you would be able to walk into any
store or shop anywhere online and use your coins to buy goods or services just
as easily as you would with cash, a check, or some kind of bank or credit card.
But unfortunately, there are still precious few companies of note who service
crypto payments at their establishments.

That figures to change as time goes on and the coins are understood by more
people. But at the moment, the coins just aren’t in circulation enough for them
to even come close to the volume of use for traditional fiat money.

Coin Hoarders

There are many people who became rich when the first cryptocurrency offerings
that they purchased rose dramatically in value. In addition, some others came on
board when the coins endured a rockier stretch. But the common ground between
these two groups is that they seem far more willing to hold onto the coins
rather than utilize them as currency as they were intended.

That leads to a kind of self-fulfilling cycle with the sellers that we
mentioned above. Since the coins aren’t being spent, the businesses don’t have
any reason to offer cryptocurrency services. That gives even less incentive for
those who are holding onto the coins to try and use them, since there aren’t any
prime places to spend the money.

Fear of Technology

Perhaps the most basic factor holding people back from getting involved with
cryptocurrency, as either a buyer or an acceptor of the coins, is that they have
a natural skepticism towards anything technological. They might think that,
because the coins aren’t physical and are in the digital sphere, they can be
easily manipulated or hacked. Or they might simply lack the
knowledge about the
subject.

What also makes it tough for people who don’t know much about cryptocurrency
is that it is hard to get proper information about it. The naysayers are quick
to point out the weaknesses without noting the many strengths of the coins. It
makes it difficult for people to know what to believe when it comes to
cryptocurrency.

Conclusion

Cryptocurrency has certainly come a long way from humble beginnings to become
one of the most talked-about innovations in many years. Many true believers
think that the day when the coins take over from traditional currency isn’t long
in coming. They feel that, at some point, the people who initially were
reluctant to try cryptocurrency will find that the coins are something that they
need to have in their life, as they once did a cell phone or the internet.

Most likely, cryptocurrency will continue as it is for a while, gradually
picking up more users along the way. At some point, the idea of it replacing
traditional currency seems like it could be more than just a pipe dream.