The financial system has evolved over the years and has changed how we transact and do business in a number of ways. The benefits of cryptocurrency in today’s world can’t be overemphasized especially when we look back to how money evolved over time before it became the fiat currency that we used today.
Before money came into existence people utilized the barter system to make transactions possible, for instance, you have yam but you need potatoes. To get potatoes will mean exchanging your yam with someone who is willing to take yam for potatoes.
The barter system was nice but somehow challenging, to get what you want you to need some bit of luck to find someone who has what you want and is willing to have them exchanged for what you have. Also, there was no means of measuring the equivalent amount of an item to exchange with another. One party either gives more or takes less.
The history of money evolved over the years, coins were adopted and acceptance and value were based on how much they weighed. It was later on that coins started bearing actual value on them.
The evolution of coin money was followed by paper money, which was initially backed by gold, a precious metal believed to be a good store of value to date.
The introduction of fiat paper money we have today saw them removing gold backing on the currency. Because it doesn’t have something of value backing it, it has the tendency to become worthless and very low in value since more can be printed at any point in it. This is unlike gold which is almost always scarce and stores its value for years to come.
The current trends saw the creation of digital currencies (crypto) eg bitcoins which have a finite number that can be mined, making them scarce with the capacity to store value. The bitcoin has a pool of 21 million that can be mined and as needs surge, their value can appreciate in a geometric pattern leading to profit by those who saved on them.
- 1 What is cryptocurrency?
- 2 Properties of Cryptos
- 3 Is cryptocurrency a good investment? Is crypto real money?
- 4 What are the pros and cons of cryptocurrency:
- 4.1 Pros:
- 4.2 Cons:
- 5 Does crypto have a future?
- 6 Future benefits of cryptocurrency
- 7 Conclusion
What is cryptocurrency?
These are digital currencies that can be transferred from one individual to another without involving third parties or intermediaries like banks. Money is sent or transferred using blockchain technology.
These currencies take away the usual bottlenecks that plague the conventional banking system of today.
Its use of encryption technology is where it got its name “cryptocurrency ” or “crypto” from. Safety and fast transactions are two major merits of these kinds of transactions.
Properties of Cryptos
Can be transacted:
The crypto network can be used to propagate transactions and is fast. These transactions can be done on the global level cutting across different countries and this can be achieved in a short time.
It is money
Unlike gold, it can store money value without the problems of storage, indivisibility, and transportation. I like to think of cryptos as a digital form of gold.
Since their supply is well controlled the probability of value rising in the future is very high. The current projection forecasts that by 2140 Bitcoin will climb to its all-time highest number.
Revolutionary, Users have more control over their funds.
The technology empowers you to control your assets and how the system works. There is a record of your transaction history and account balance, unlike traditional banks which are controlled by rules unknown to us.
Is cryptocurrency a good investment? Is crypto real money?
Investing in crypto is a good investment especially if you have some coins to sell when the coin is scarce and priced very high. For example, sometime this year when the price of bitcoin rose to $70K I made some sales of my bitcoin assets and it amounted to some unbelievable profits. These coins I acquired during the deep period where prices were too low due to surplus coins.
Despite how good of an investment it is, don’t eliminate the fact that you bear some risk of losing out if the market goes against your direction. This happens when you buy in the bull market (when the price is rising or in an up trend) and sell off during the bear market (when there is a downtrend or falling price). To make profits, the reverse is supposed to be the case, buy in a bear market and sell when it’s bullish.
Let’s not forget crypto has value just like your real money and may even have more store of value sometimes. Some cryptocurrencies are backed by US dollars and are available for trading. Usdt has a value of 1USDt equivalent to 1USD.
The cryptocurrency has found its use in the e-commerce industry, global payments, remittance, P2P” lending, and microfinance sectors taking the usual need for conventional fiat money.
What are the pros and cons of cryptocurrency:
The use of cryptocurrency has its advantages and disadvantages or what people love to call pros and cons. This is a normal expectation of things we have at our disposal as humans. It is advisable to always count the cost before we venture into any field or area in life. So let’s get to know some of them:
It doesn’t involve third parties
Conventional banking and financial system involve a third party even when it’s your money you want to use to fiancé a new mortgage, buy a car, or land. Agents, lawyers, landlords, and other expenses are some of the unavoidable third parties in these kinds of deals and can amount to unplanned expenses and expenditure of energy.
This kind of transaction is even more cumbersome when it’s on the international level, you will have to change your local currency to the other person’s currency at the bank or black market’s rate which may not be in your own interest and can lead to unforeseen expenses. Recently in Nigeria, the citizens are even forbidden to buy dollars using naira and their naira-denominated debit cards can’t pay for goods online.
These third-party involvement times also lead to delays in executing transactions, some banks may take 3-5 working days to execute a transaction and this can be disadvantageous to today’s business world.
The good news is that these bottlenecks can be eliminated if cryptocurrencies are utilized for these transactions. The deal can be done faster and with fewer fees to pay. For example, someone in Ghana can send 5 BTC to someone in the US in 5 minutes and the fee may not even be up to $10 dollars compared to when you use the regular bank to do this transaction, and the entire process involved in making it possible.
These transactions are decentralized and can be done at any time of the day, so weekends and non-working hours can no longer be accepted as excuses for not completing transactions.
2. Less risky than fiat
One can carry large chunks of money around in the form of crypto without getting noticed. Also, transactions are made without sending out your personal information.
Remember your bank cards in the hands of one criminal can wreck your financial future, unlike cryptos that have many security features in place to protect your money.
When your bank server provider is out of network your money becomes inaccessible which is rare when dealing with cryptocurrency. The technology that powers crypto is almost always available in a 24 hours cycle.
Dealing in cryptos is less risky since it puts you in control of your transactions. Nobody will know how much bitcoin, Ethereum or dogecoin coin you own except you tell them but banks, the government, and the banking system have this information at their fingertips.
3. Less fraud:
The technology doesn’t put out our personal information in the public as a way to curb identity theft and the various fraudulent activities that stem from it.
Cases of people making transactions using your card details are rare or unheard of for the reason we mentioned above.
There are also no cases of counterfeit currencies since they are digital tokens and not like paper money which can be faked.
Also, the case of individuals who fraudulently call their bank to dispute debts that they authorized is also eliminated. The system is decentralized and gives no room for this kind of mischievous activity. Once the transactions reach final confirmations they can’t be reversed.
The computers that store and record transactions are interlinked and work effectively, hacking them is one of the hardest to do on earth. Another reason is that the computers reset every minute leaving only a small window for hackers which isn’t enough to successfully compromise the system.
Cryptos are universally accepted, unlike fiat currencies. Someone in Nigeria can successfully transact with someone abroad using cryptos.
This saves time and reduces the extra expenses which might be incurred converting fiat currencies for cross-border transactions. There are no exchange rates, interest rates, or transaction charges and they get executed immediately.
No third-party regulation
Because it lacks some form of government protection, it is a bit risky, there are no laws put in place to protect investors from a loss.
There are no measures put in place to protect people from losing out on the volatilities of the market. The value is dependent on the forces of demand and supply which can happen within seconds. An uptrend can go in reverse order in a space of a second and that’s when you will realize why the first three letters of the word cryptocurrency say ”cry”.
Fear that it might go extinct in the future:
Since it’s not under any regulation, the fear exists that cryptocurrency might go extinct or crash in the future rendering people bankrupt that’s why people are advised to venture in with only spare money. Is there anything really called spare money when you already don’t have enough?
Mistakes can lead to loss of money
There is no means to identify wallet addresses with personal information so you only need to trust your instincts that they are entered correctly. Mistakes can lead to loss of funds as once confirmations are complete the transactions are not reversible.
Fosters crime across borders
Some fraudsters who are involved in various forms of internet scams and romance dating scams using the conventional banking system can be easily caught but with the blockchain technology they can receive proceeds of their crime without leaving traces.
They can successfully defraud people without being caught. Also, some more advanced crimes have adopted bitcoin as means of payment. We hear of kidnappers who ask to be paid in crypto. Also, there are cases of money laundering using cryptocurrency.
Occasional high charges
The charge is determined by network congestion. This can go very high even for a small amount if the network is congested.
The interface isn’t userfriendly
To successfully use it you need some level of knowledge to avoid exposing yourself to unnecessary losses.
It is more volatile than forex.
If you trade forex then you should already know something about volatility. We have cases of erratic 100% price fluctuations in a day. This volatility is great only for those who have mastered it, the reverse is the case for people who don’t know how to make the best of it.
Not a universal means of exchange
Despite its growing popularity cryptocurrency is not generally accepted as a means of exchange. A lot of marketplaces are yet to start using cryptocurrencies as official legal tender. In the past, we have heard of the adoption of bitcoin by Tesla and recently the likelihood of a change in mind.
Does crypto have a future?
The future of crypto is very promising, it does have a colorful future looking forward. We expect to see more global acceptance, and more e-commerce sites adopting crypto and its use in remittance, Microfinancing, and P2P lending.
In the future we hope to see cryptos utilized more in healthcare, voting, intellectual properties, equity, private markets, crowdfunding, debt settlements, derivates, digital rights, escrow and wages.
The so many sectors already powered by blockchain technology are a sign that something good is ahead for investors.
Future benefits of cryptocurrency
- Transactions can be done easily
Utilizing peer-to-peer people can transact among themselves easily in a fast fashion and with lower fees. This can be done on mobile apps, hardware wallets, or other wallets. In the future, more ATMs will allow the purchase of coins.
Faster exchanges and settlements:
Aside from profit-making, the system can be utilized to make fast and swift settlements. It is a good option since sending and receiving can be done in a very short time.
Lower transaction fees
The fees paid on transactions in the future will even be lower, currently, it is better utilized for transactions than using conventional banks, especially on a global level.
More robust security:
A blend of blockchain technology and cryptography makes the platform secure and we hope that improvement in the future will even tighten the security this is another future benefit of cryptocurrency.
The benefits of cryptocurrency will never go out of fashion and people will continue to reap large amounts of profits from the volatilities of the crypto market.
Personal information will continue to be protected and more people will embrace the use of cryptos.
It will continue growing over time, it is on record that bitcoin moved from its $1.6 billion dollar cap in 2013 to $1.5 trillion this year which is a good omen for investors.
Easier cross-border payments:
More countries now accept bitcoin for payments and in the future even more far to reach places will embrace the technology.
More coins available with more opportunities
Currently, there are more than 1700 coins that can be traded and more is on their way to getting added meaning more coins are available for trading.
As against the capital market that opens and closes at certain periods of the day, the cryptomarket is always open for anybody to take profits at all times depending on the level of trading expertise.
The benefits of cryptocurrency are quite many that any person serious about making money can’t totally ignore the opportunities it offers.