Cryptocurrency is becoming better-known and more popular throughout the entire world. However, being relatively new, you may not be familiar with it or why it’s even a big deal. It’s time to learn how cryptocurrency will make the world a better place.
Basically, cryptocurrency is electronic money stored in e-wallets or computer files. Also, cryptocurreny is transferred and tracked by using blockchain technology. This technology tracks every update or transfer chronologically. Then, it stores the information cryptically so that anyone can see it. However, existing data cannot be changed.
Bitcoin is one of the most well-known cryptocurrencies out there. Additionally, there are thousands of different cryptocurrencies available. Not all cryptocurrencies serve the same purpose. While some are for general use, others solve specific problems and/or serve specific industries.
Cryptocurrency may seem like a technology of the future. It has, and will, revolutionize the way we store money, pay for goods and services, and do business. Additionally, there are other ways that cryptocurrency will make the world a better place.
Cryptocurrency is a digital payment system that doesn’t rely on banks to verify transactions. It’s a peer-to-peer system that can enable anyone anywhere to send and receive payments. Instead of being physical money carried around and exchanged in the real world, cryptocurrency payments exist purely as digital entries to an online database describing specific transactions. When you transfer cryptocurrency funds, the transactions are recorded in a public ledger. Cryptocurrency is stored in digital wallets.
Cryptocurrency received its name because it uses encryption to verify transactions. This means advanced coding is involved in storing and transmitting cryptocurrency data between wallets and to public ledgers. The aim of encryption is to provide security and safety.
The first cryptocurrency was Bitcoin, which was founded in 2009 and remains the best known today. Much of the interest in cryptocurrencies is to trade for profit, with speculators at times driving prices skyward.
How does cryptocurrency work?
Cryptocurrencies run on a distributed public ledger called blockchain, a record of all transactions updated and held by currency holders.
Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complicated mathematical problems that generate coins. Users can also buy the currencies from brokers, then store and spend them using cryptographic wallets.
If you own cryptocurrency, you don’t own anything tangible. What you own is a key that allows you to move a record or a unit of measure from one person to another without a trusted third party.
Although Bitcoin has been around since 2009, cryptocurrencies and applications of blockchain technology are still emerging in financial terms, and more uses are expected in the future. Transactions including bonds, stocks, and other financial assets could eventually be traded using the technology.
Why are they popular?
Once dismissed as a fringe interest of tech evangelists, cryptocurrencies—particularly Bitcoin—have skyrocketed in value in recent years. In 2021, the price of a Bitcoin surged to more than $60,000 for the first time. Different currencies have different appeals, but the popularity of cryptocurrencies largely stems from their decentralized nature: They can be transferred relatively quickly and anonymously, even across borders, without the need for a bank that could block the transaction or charge a fee. Dissidents in authoritarian countries have raised funds in Bitcoin to circumvent state controls, for example. Some experts say that digital assets are primarily tools for investment.
The price of Bitcoin and other cryptocurrencies fluctuates wildly, and some experts say this limits their usefulness as a means of transaction. (Most buyers and sellers don’t want to accept payment in something whose value can change dramatically from day to day.) Nevertheless, some businesses accept Bitcoin. Many investors see Bitcoin as a speculative asset to hold over time, rather than make payments with, and it often draws comparisons to gold. Some see Bitcoin as a hedge against inflation because the supply is permanently fixed unlike those of fiat currencies, which central banks can expand indefinitely. However, some experts have questioned this argument. The valuation of other cryptocurrencies can be harder to explain; for instance, Dogecoin was created as a joke yet has surged in price, partly due to the support of some high-profile investors and entrepreneurs.
In countries with historically weak currencies, including several Latin American and African countries, Bitcoin has become popular with citizens. In 2021, El Salvador made waves by becoming the first country to make Bitcoin legal tender (residents can pay taxes and settle debts with it), though the move has sparked protests. Some politicians in other parts of the region have expressed support for the idea.
Stable coins, meanwhile, have the potential to rival fiat currencies as the dominant form of payments, experts say. Their value is relatively stable, and they can be sent instantly without the transaction fees associated with credit cards or international remittance services such as Western Union. In addition, because stable coins can be used by anyone with a smartphone, they represent an opportunity to bring millions of people who lack traditional bank accounts into the financial system. “Stable coins are very promising as a form of low-cost, high-speed, inclusive payment technology,” says CFR’s Brent McIntosh.
The paradox here lies in the difficult balance between wanting regulation, and fearing the loss of the fundamental character of crypto that would result from that very regulation.
Regulation offers protection and stability; while crypto has thrived from volatility and anonymity. But currencies can’t operate without being regulated, especially not to the scale that crypto has reached.
Finding a middle ground between regulating a lawless commodity and allowing it to continue to build value will be a challenge for governments, coin exchanges, and investors alike.
Cryptocurrency Transforming the world.
We see many big players like Tesla, PayPal, Visa, and MasterCard using major currencies. We see the beginning of change. These cryptocurrencies are now becoming more and more accepted around the world. These companies can now learn the practical handling of currencies. More and more players and entrepreneurs are starting it. So how will the digital currency market change in the near future?
A Beneficial Rise in Economic Activities
There is already an entire industry built around cryptocurrencies and it’s held by institutions dedicated to supervising all the digital coin exchanges taking place throughout the world. The rate at which the cryptocurrency industry is growing is earth-shattering and this can be confirmed by early adopters that became rich overnight and found opportunities to grow financially. Bitcoin, the most famous of these cryptocurrencies, has already permitted many people and companies to develop and flourish, while many also rely on trading as their source of income. The economy is slowly shifting to adapt to these needs and cryptocurrencies have a great potential in satisfying them.
Great Opportunities for Poorly Banked Countries
More than a third of the world population does not have access to basic banking services that can help them out in case of a personal financial crisis – loans, checking accounts and the list can go on. These people that in most cases are already financially disadvantaged typically resort to doubtful and dangerous lending practices. The interest rate of these practices is anything but fair, which consequently leads to more instability among the people who requested the loan. This is where cryptocurrencies come in with their high volatility and ease-of-use.
There are now many apps and programs that facilitate the use of cryptocurrencies and bring them closer to the wider audience. An added benefit of cryptocurrency use is that it’s completely decentralized, so trading can be done freely across borders. The use of technology will facilitate a financial revolution that will leave everyone more financially connected, empowered and enabled.
Low Transaction Costs
Because cryptocurrencies and blockchain don’t need an actual brick-and-mortar building to exist, the costs associated with their transactioning are minimal. There is no need for employee wages, utility bills or rent to be paid, so these savings naturally morph into low transaction fees. This in turn encourages more and more people to trust these new financial tools and start transactioning, allowing for the global economy to be more closely intertwined. And depending on the broker you choose, you can even trade with no minimum deposit requirements – as offered by CryptoRocket, for example.
Raising money will become transparent.
People often rely on many online platforms to raise money. In this way, if we approach it differently, we can find a tremendous strain to attract capital. However, relying on digital currencies to raise capital can be a transparent solution. At the same time, it is even possible for many people to openly give money and even explain why. With online platforms working on digital currencies, we can see that it will be easy in the near future.
The best way to accept collective investments is using a wallet based on a special blockchain technology that provides more funds in public places. In this way, it is possible to raise capital without worrying about transaction fees for banks or other third-party platforms. Digital currency wallets can help donors as well as people with similar requests. Coin-based digital wallets help various parties to make effective financial contributions, saving time and money.
How disruption can occur
The financial-services industry is up for serious disruption—or transformation, depending on how it approaches this issue. For the research for Blockchain Revolution, we went through and identified eight different things that the industry does: it moves money, it stores money, it lends money, it trades money, it attests to money, it accounts for money, and so on. Every one of those can be challenged.
You pick any industry, and this technology holds huge potential to disrupt it, creating a more prosperous world where people get to participate in the value that they create. The music industry, for example, is a disaster, at least from the point of view of the musicians. They used to have most of the value taken by the big labels. Then, along came the technology companies, which took a whole bunch of value, and the songwriters and musicians are left with crumbs at the end. What if the new music industry was a distributed app on the blockchain, where I, as a songwriter, could post my song onto the blockchain with a smart contract specifying how it is to be used?
Maybe as a recording artist posting my music on a blockchain music platform, I’ll say, “You listen to the music, it’s free. You want to put it in your movie? It’s going to cost you this much, and here’s how that works. You put it in the movie, the smart contract pays me.” Or how about using it for a ring tone? There’s the smart contract for that.
This is not a pipe dream. Imogen Heap, who’s a brilliant singer-songwriter in the United Kingdom, a best-selling recording artist, has now been part of creating Mycelia, and they’re working with an amazing company called Consensus Systems, that’s all around the world, blockchain developers, using the Ethereum platform; Ethereum is one blockchain. She has already posted her first song onto the Internet. I fully expect that many big recording artists will be seriously investigating a whole new paradigm whereby the musicians get compensated for the value that they create.
What the future holds is still unclear
While the future of cryptocurrency will be shaped by regulators, it can also be influenced by brands, many of which are jumping into the market to fill the needs of the growing marketplace that governments have so far ignored. This can be through facilitating trades in a more comfortable, safe environment for “newbies,” or offering education and resources for curious intenders.
Peer-to-peer payment app Venmo is doing both of these things – offering its customers the opportunity to use a platform they’re already comfortable with to dip their toes into crypto, and providing easy-to-understand content to help educate intenders along the way. Established finance brands and fintech disruptors alike can be a bridge to the future of crypto.
Part of that future means leaning in to the changing profile of investors, and anticipating what the more “mainstream” audience might demand. Traditional payment companies that offer access and education will no doubt make the market more attractive for older investors, while the growing list of businesses accepting the digital currencies can make the market feel safer and more stable.
Four tips to invest in cryptocurrency safely
According to Consumer Reports, all investments carry risk, but some experts consider cryptocurrency to be one of the riskier investment choices out there. If you are planning to invest in cryptocurrencies, these tips can help you make educated choices.
Before you invest, learn about cryptocurrency exchanges. It’s estimated that there are over 500 exchanges to choose from. Do your research, read reviews, and talk with more experienced investors before moving forward.
Know how to store your digital currency:
If you buy cryptocurrency, you have to store it. You can keep it on an exchange or in a digital wallet. While there are different kinds of wallets, each has its benefits, technical requirements, and security. As with exchanges, you should investigate your storage choices before investing.
Diversify your investments:
Diversification is key to any good investment strategy, and this holds true when you are investing in cryptocurrency. Don’t put all your money in Bitcoin, for example, just because that’s the name you know. There are thousands of options, and it’s better to spread your investment across several currencies.
Prepare for volatility:
The cryptocurrency market is highly volatile, so be prepared for ups and downs. You will see dramatic swings in prices. If your investment portfolio or mental wellbeing can’t handle that, cryptocurrency might not be a wise choice for you.
Cryptocurrency is all the rage right now, but remember, it is still in its relative infancy and is considered highly speculative. Investing in something new comes with challenges, so be prepared. If you plan to participate, do your research, and invest conservatively to start.
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Because crypto is more than a currency
Futuristic, weird, inspiring, complicated. As “Down the Rabbit Hole” illustrates across its three segments, there are many lenses to view crypto. But by taking discussions away from a portfolio and into the real world, “Down the Rabbit Hole” hopes to give enhanced perspective into why crypto is much more than a craze. Crypto is changing the way we live — even if we don’t fully know just how much (yet).