Cryptocurrency is the alternative to cash and credit card. This is storming the digital world. Many companies these days accept payments in cryptocurrencies. On the other hand, cryptocurrencies have become the home of many hackers. As the value of bitcoin increases, many people are showing interest in investing in bitcoin. Blockchain technology supports digital currency, which has a positive effect on wallets. Let’s look at some of the cryptocurrency benefits.
Crypto is a relatively new asset class that began with the creation of the Bitcoin blockchain in 2009. The primary benefit of Bitcoin and most other cryptocurrencies based on blockchain technology is that they don’t have a central authority, payment processor, or company owner.
Instead, crypto networks are peer-to-peer, meaning people can transact directly with one another. Many of the additional cryptocurrency benefits stem from their decentralized and peer-to-peer nature.
Cryptocurrency benefits: A Brief History of Cryptocurrency
In the caveman era, people used the barter system, in which goods and services were exchanged among two or more people. For instance, someone might exchange seven apples for seven oranges. The barter system fell out of popular use because it had some glaring flaws:
- People’s requirements have to coincide—if you have something to trade, someone else has to want it, and you have to want what the other person is offering.
- There’s no common measure of value—you have to decide how many of your items you are willing to trade for other items, and not all items can be divided. For example, you cannot divide a live animal into smaller units.
- The goods cannot be transported easily, unlike our modern currency, which fits in a wallet or is stored on a mobile phone.
After people realized the barter system didn’t work very well, the currency went through a few iterations: In 110 B.C., an official currency was minted; in A.D. 1250, gold-plated florins were introduced and used across Europe; and from 1600 to 1900, the paper currency gained widespread popularity and ended up being used around the world. This is how modern currency as we know it came into existence.
Modern currency includes paper currency, coins, credit cards, and digital wallets—for example, Apple Pay, Amazon Pay, Paytm, PayPal, and so on. All of it is controlled by banks and governments, meaning that there is a centralized regulatory authority that limits how paper currency and credit cards work.
Here are some of the cryptocurrency benefits
One of the cryptocurrency benefits is easy transactions. There are many transaction costs that you must pay for each transaction when you are doing business or trading with brokers or legal representatives. On top of that, there is a lot of paperwork, brokerage fees, commissions, and more. When you use cryptocurrency, it meets the needs of the middle class. The transaction is done one by one in a secure network. Transactions will be transparent and it will be easier for you to create audit trails. There will be no more confusion about who is going to pay whom. The parties to the transaction know each other well.
Cryptocurrencies can be used to transfer ownership of assets of one name to another by paying money to the seller via bitcoin. All of this is happening in the blockchain ecosystem. This will help you to trade safely and securely. Cryptocurrencies are designed to add third-party verifications and can be completed at a later date. If you are a person who owns cryptocurrency and has an account, you can reduce the time and costs associated with asset transactions.
When you use cash or credit, the transaction history recorded and will be available to banks. Every time you make a transaction, the bank registers it. However, you can check your account balance at any time. There are many financial history reviews when you do complex business transactions.
The best part about using cryptocurrency is that every transaction you make with the recipient will be unique. In any transaction, you can enter into a negotiation of terms. Information is exchanged based on the concept of pressure. You can only share the information you want to provide to the recipient. Your financial history will have a lot of privacy and your identity will be protected.
Low transaction fee
A low transaction fee is one of the important cryptocurrency benefits. When you check your bank statement, you reduce the transaction fee for each transaction you make. If you do a lot of transactions every month, the commission will be very high. Data miners receive compensation from the cryptocurrency network, so there will be no transaction fee or much lower fees. If you outsource your cryptocurrency wallet to a third party, you will have to pay for the service. However, the transaction fee received by cryptocurrency transactions is lower compared to the traditional financial system.
Give access to credit
The Internet allows people to transfer cryptocurrencies easily and securely. Anyone with access to the Internet can use cryptocurrency services. They also need to know the cryptocurrency network. Although people have access to the Internet, many do not use banks or exchange offices. Transactions and asset transfers are made easier for interested customers using the cryptocurrency ecosystem.
In the traditional banking system, when a person dies, the amount goes to the person being introduced. You may close your account when you violate the Terms of Service. The best part about cryptocurrency is that you will only own the private and public encryption keys. It will be easier for you to identify the cryptocurrency network.
When you do a transaction with cryptocurrency, you cannot reverse it. To protect against hackers and information manipulation, a reliable encryption technique will use during the cryptocurrency transaction process. Strong security is one of the most important cryptocurrency benefits.
Blockchain technology will manage the database that has the bitcoin transaction records. The decentralization would involve only two parties in the transaction, i.e., the sender and receiver. You no more have to deal with any third party. There is no one to monitor what you are doing.
A More Inclusive Financial System
Some of the cryptocurrency benefits extend to people who don’t have access to the traditional financial system. Due to its decentralized and permission-less nature, one of the cryptocurrency benefits is that anyone can participate.
People don’t have to have permission from any financial authority or government to use the crypto ecosystem. (Though it’s worth noting that Bitcoin mining banned in China.) They also don’t necessarily need to have a bank account. There are billions of people today who “unbanked,” meaning they have no access to the financial system, including bank accounts. With crypto, all these people need is a smartphone, and they can essentially become their bank.
Mineable cryptocurrencies with a limited supply cap, like Bitcoin, Litecoin, and Monero, to name a few, are thought to be good hedges against inflation. Because monetary inflation can occur when central banks and governments print more money, increasing the supply, more scarce things tend to appreciate.
With more and more new dollars chasing fewer and fewer coins, the price of these fixed-supply coins as measured in dollars has a higher chance of going up. Additionally, the Bitcoin protocol, for example, also designed to keep those coins scarce regardless of what happens with monetary policy.
It is no secret that Bitcoin has been the best asset for the last 12 years. When Bitcoin introduced in 2009, it was worthless. In subsequent years it increases to a fraction of a penny and then to tens of thousands of dollars. This represents millions of percent profit. In comparison, the S&P 500 index returns an average of about 8% per year.
Some altcoins sometimes outperformed bitcoins by large margins, although many later saw their prices fall. Profits like this may be one of the most well-known benefits of digital currencies. (On the other hand, losses may be one of the most well-known drawbacks.) Price fluctuations have marked the crypto space, which has been one of the key benefits of digital currencies for day-to-day traders and speculators.
Exponential Industry Growth
The cryptocurrency industry has been one of the fastest-growing markets that most of us have seen in our lifetime. It may now be logically comparable to companies that were at the top of the Internet in the 1990s and early 2000s.
The total market value of digital currencies in 2013 was about $ 1.6 billion. By June 2021, it had grown to more than $ 1.4 trillion.
Cryptocurrency benefits: Conclusion
The world divided when it comes to cryptocurrencies. On one side are supporters such as Bill Gates, Al Gore, and Richard Branson, who say that cryptocurrencies are better than regular currencies. On the other side are people such as Warren Buffet, Paul Krugman, and Robert Shiller, who are against it. Krugman and Shiller, who are both Nobel Prize winners in the field of economics, call it a Ponzi scheme and a means for criminal activities.
In the future, there’s going to be a conflict between regulation and anonymity. Since several cryptocurrencies linked with terrorist attacks, governments would want to regulate how cryptocurrencies work. On the other hand, the main emphasis of cryptocurrencies is to ensure that users remain anonymous.
Futurists believe that by the year 2030, cryptocurrencies will occupy 25 percent of national currencies, which means a significant chunk of the world would start believing in cryptocurrency as a mode of transaction. It going to be increasingly accepted by merchants and customers, and it will continue to have a volatile nature, which means prices will continue to fluctuate, as they do for the past few years.