There is increased attention to cryptocurrency as an attractive investment option after Bitcoin’s massive bull run in 2011. On the other hand, this novel technology is more than just an asset–it is a prime contributor to making the world a better place.
There are a lot of reasons why cryptocurrency is important and we will include some of them in this article. Aside from its obvious role in the finance industry, you will see that the asset’s benefits extends further than that. It is changing economic, political, and socio-cultural landscapes through greater digitization and the elimination of bureaucracy.
Here is a list of the 10 Reasons Why Cryptocurrency is Important today and in the future.
Cryptocurrency is a Good Hedge Against Economic Inflation
Unlike fiat currencies that generally track the movement of their home country’s Consumer Price Index performance, cryptocurrency is not affected by economic inflation. The price of tokens inflates or deflates based on their pre-determined maximum supplies.
Bitcoin currently has 19 million circulating tokens and is only two million away from completing its 21 million maximum cap. The price of each token increases as supply becomes rare. Whatever happens with the economy–whether the Federal Reserve raises interest rates, CPI spikes, and unemployment surges, Bitcoin’s price will not receive the same blow as fiat currencies. It will continue to rely on the law of supply and demand, making it a good “quasi-safe haven” asset to invest in during an economic downturn.
Cryptocurrency Terminates Money Counterfeiting Incidents
Did you know that there is one counterfeited note in every 10,000 genuine fiat currency? Fraud may be one of the biggest problems that central banks worldwide face today.
Cryptocurrency addresses this problem spot on. It is based on blockchain technology characterized as tamper-proof, fraud-proof, and immutable. Details of every transaction entered on the blockchain are simultaneously distributed to millions of computers globally. Tampering details on one computer will not change anything on all others.
Cryptocurrency Eliminates High Bureaucracy
Fiat currencies are highly bureaucratic, meaning their existence, movements, and alterations are dependent on the decision of the government or other decision-making bodies. Unlike cryptocurrency which is decentralized and free from third-party intervention.
Cryptocurrency Streamlines Business Transactions
Transactions using cryptocurrency as a payment medium only take minutes to hours to complet. This is contrary to the traditional fiat transfers which could take days and even weeks to execute.
Many businesses today are increasingly drawn to peer-to-peer transfers to save time and costs.
Cryptocurrency Taps Opportunities on New Demographic Groups
There is now a new section of the world population deemed as the “crypto group.” This term signifies their relative exposure to digital currency, meaning they use more crypto for their daily transactions compared to fiat.
In 2020, the Republic of the Marshall Islands announced the implementation of its state-backed digital currency developed on the Algorand blockchain called SOV. This move aims to reduce the country’s sole reliance on the US Dollar which is its official national currency to date.
This shift is expected to bring greater attention to crypto’s potential to be on a level playing field with leading currencies worldwide in the context of usage, importance, and buying power.
Cryptocurrency is a Testament of Digital Transformation
Satoshi Nakamoto took the world by storm after introducing Bitcoin as the world’s official electronic cash in 2008. Today, Bitcoin’s nine-page white paper has become a pinnace of digital disruption using blockchain technology.
Today, cryptocurrency is considered one of the greatest technological inventions introduced in the modern era.
Cryptocurrency Makes Investment Accessible Through Crowdfunding
Many new projects in the crypto space are funded through crowdfunding. That means the crowd can chip a percentage of their cryptocurrency holdings invest in these projects. This is called “staking,” which lets users earn passive income while technically doing nothing.
It benefits retail investors by helping them take part and earn without the need to shell out a huge amount of investment capital.
Cryptocurrency Strengthens Online Commerce
Around 15,000 businesses worldwide accept cryptocurrency as payments. Moreover, fintech companies such as PayPal and Mastercard have spotted the big opportunity on crypto. These financial behemoths are redesigning their frameworks in a way that is more welcoming to clients using digital currency.
Moreover, thousands of payment gateways nowadays see and accept cryptocurrency tokens as good as cash.
Cryptocurrency Protects Confidentiality
Every cryptocurreny transaction is encrypted, making information undecipherable to viewers even on a public ledger. This protects the confidentiality of transacting parties.
This is not the case when using third-party institutions. Banks require proof of identification and conduct careful screening before any transaction could take place. While this ensures money transfers are free from illicit activities, it also prolongs the transaction process. Similarly, it marginalizes people not in possession of required documents.
Cryptocurrency Liberates the Ownership of Money
The value of cryptocurrency does not represent nor is tied to the value of a country’s debt, which is the case with fiat. This mechanism creates an “imagined ownership” of money instead of a real one. Similarly, banking is a game of trust. Banks reinvest people’s savings entrusted under their care, making them the “real owners” of one’s cash in practice.
In cryptocurrency, ownership is solely for everyone, by everyone. And accountability rests fully on an individual. Thanks to its decentralized nature which managed to separate it from unnecessary and costly interventions.