Cryptocurrency has the potential to revolutionize the way we think about and use money. It’s important to note that crypto isn’t considered as a currency, because only governments have the ability to create money. Instead you should view crypto as an asset class, which in most cases will be taxed as such. Still, there’s no denying that cryptocurrencies like Bitcoin and Ethereum have made a huge impact on the financial economy. Here are 5 benefits of cryptocurrency and a few ways this asset class could potentially change the world from what it is today:
- Decentralization: Decentralization refers to the distribution of cryptocurrency away from a central authority. In the context of blockchain technology, decentralization refers to the idea that the network is not controlled by any single entity, but rather is maintained by a distributed network of nodes (computers). Each node in the network has a copy of the blockchain and helps to validate and relay transactions, ensuring that the network is secure and transparent. This decentralized structure allows for greater resilience, as there is no single point of failure that can be exploited, and it gives you more control over your own data and assets. If you have no need for a central authority such as a bank when it comes to governing your money, you’ll never be limited by a credit score, socio-economic standard, or a lack of access to financial services.
- Increased financial inclusion: Cryptocurrency has the potential to provide financial services to people who may not have access to traditional banking systems. This could include people living in rural areas or those living in countries with unstable economies. By putting the economic control into the people’s hands, they will inevitably rise up out of oppression and poverty. Governments would have a harder time exerting their control over the masses due to an increase in financial independence.
- Faster, cheaper transactions: Cryptocurrency transactions can be processed faster and at a lower cost than traditional financial transactions. This could make it easier for people to send and receive money, especially internationally. Traditional financial transactions often involve multiple intermediaries, each of which can add time and cost to the process. Cryptocurrency transactions, on the other hand, are processed and can be directly viewed and varified on the blockchain, allowing them to be completed more quickly and at a lower cost.
- Increased security: Cryptocurrency transactions are secure and encrypted, making them less vulnerable to fraud and hacking. Advanced cryptography functions help protect against tampering and fraud. In a blockchain network, transactions are recorded on multiple copies of a shared digital ledger. These copies are stored on a network of computers, or “nodes,” as we stated earlier, that are spread across the internet. When a new transaction is added to the blockchain, it is verified by multiple nodes and then added to the ledger as a “block.” Each block is connected to the previous block, creating a chain of blocks, or a “blockchain.”This advanced technology could give individuals and businesses greater peace of mind when it comes to their financial transactions.
- Alternative to traditional currency: In some cases, people may see cryptocurrency as a more stable or desirable alternative to traditional fiat currency. This could potentially lead to a shift away from traditional currencies in favor of cryptocurrency. Furthermore, the transparency of the blockchain means that all transactions are visible to everyone on the network. This makes it easier to detect and prevent fraudulent activity, as any attempt to alter the ledger would be immediately visible to the rest of the network. Banks and other financial institutions are well known for printing money out of thin air, and has been subject to manipulation for decades. The trust level has gone downhill and continues to slide, as more people are looking for other investment opportunities to protect their wealth.
It’s worth noting that while cryptocurrency has the potential to bring about significant changes in the financial world, it is still a relatively new technology and its long-term impact is uncertain. As with any new technology, it will likely take time to see how it is adopted and how it ultimately shapes the world.