What is CryptoCurrency?
The best word I can think of to describe cryptocurrency is digital cash. A cryptocurrency transaction is different from an online credit card transaction because the sender cannot reverse the transaction once it is sent and confirmed by the blockchain.
Credit cards can be a nuisance to both businesses and consumers. Chargebacks affect businesses’ ability to operate and make profits. For consumers, millions of their legitimate transactions have declined because of companies adopting overly strict transaction rules. Some consumers face the inconvenience of being verified before being able to conduct transactions.
Cryptocurrency users face none of these issues. In 2018 approximately 290 million people globally owned some form of crypto. Yet only 14,000 businesses globally accept crypto as payment (2018). This is a completely ridiculous business to customer ratio (of more than 20,000 customers for each business that accepts crypto). It is a good thing crypto can be used for a lot more than just shopping.
Crypto can also come in the form of a tokenised asset. Tokenised assets can take very expensive items, such as a new housing development, and break it down into affordable divisible portions. This reduces the barrier to entry for a lot of investors. Returns and dividends on investment can easily be handled by the blockchain by issuing additional tokens to the token holder’s address.
Fees for crypto transactions are determined by demand, but at the present time these are only a few cents. In times of exponential growth, some of the bigger blockchains can come under pressure and fees go up. This is a scaling issue and all blockchains have been working on solutions to improve performance.
The advantage of digital cash is that it is completely borderless, meaning it does not matter where the person you are sending the money to lives. Cryptocurrency is much faster than current banking solutions such as drafts, international money transfers, and services like Western Union which take a minimum of 3 days and often longer.
Cryptocurrency decentralises the power of financial resources. For example, not everyone is able to get a bank account, whereas with cryptocurrency anyone can create an account and start making transactions.
To better understand the intentions of cryptocurrency, take a look at the message the creator of Bitcoin, Satoshi Nakamoto, put into the first block. “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”.
By referencing this article Satoshi Nakamoto is really saying that Bitcoin can prevent these types of catastrophes.
The main suggestion from this article is that banks will receive a cash injection from taxpayer dollars. Cryptocurrency is a banking system that is self-governing and does not need government assistance. It is a currency that gives power back to the people.