Cryptocurrency and The Future of Money
Tags: Transactions, Investment Opportunities, Blockchain Technology, Cryptocurrency, Bitcoin

Many people see cryptocurrency merely as something to invest in. They see it as intrinsically without value and, depending on their point of view, an investment that could have the potential to make or to lose a lot of money.

However, cryptocurrency and blockchain technology is far more than that. The uptake and normalization of cryptocurrency and blockchain has already begun to have far reaching global impact on all aspects of society. In the future, most experts agree the disruptive effects of blockchain technology are inevitable.

What is Cryptocurrency?

Cryptocurrency is an encrypted string of data, encoded to signify a unit of currency. It could be argued that this is similar to when precious metals and later on paper money representing gold was used as a medium of exchange. Gold was chosen because of its unique features — it is rare, portable, divisible and most importantly difficult to find and labor intensive to mine. As a medium of exchange, cryptocurrencies such as Bitcoin have all of these attributes due to the complexity of cryptography they are built on and their controlled supply.

Since 1971, FIAT money is no longer tied to gold reserves. It simply has value because governments say it does, without anything tangible to back it up. Should they wish to do so, governments around the world are able to issue unlimited amounts of money without restraint.

Properties of Cryptocurrencies

Transactions made using cryptocurrency are irreversible. There is no central authority policing transactions to ensure goods and services are received in return.

Transactions and accounts using cryptocurrency are anonymous and not connected to real world identities or addresses.

Transactions are mostly fast and global.

Cryptocurrency funds are completely secure, locked using a public key cryptography system.

Unlike with banks, use of cryptocurrency is permissionless. Anyone can download the software and send or receive cryptocurrency without censorship.

Most cryptocurrencies limit the supply of the tokens by a schedule written into the code. Bitcoin, for example, the rate of supply will decrease over time and reach its final amount in 2140.

Cryptocurrencies, unlike FIAT money, do not represent debt. Whereas numbers in a bank account are like IOUs, cryptocurrencies just represent themselves.

Cryptocurrency is Revolutionary

Examining these properties, we can see the revolutionary impact of cryptocurrency. Cryptocurrency is a permissionless, irreversible and an anonymous method of payment which threatens banks’ and governments’ control over their citizens.

The fact that the supply of cryptocurrencies is not controlled by governments, banks or any other centralized institution takes away their ability to manipulate currency supply in order to control monetary policy. They are secure and free from political influence.

Cryptocurrency is not only a Speculative Asset

Wall Street and the investment community tend to see cryptocurrency as a speculative asset class to be traded, but the core value of the technology as a payment system should not be overlooked.

The use of Bitcoin is particularly valuable in the developing world where billions of people are without basic banking services. In this context, the core attributes of Bitcoin and other cryptocurrencies to enable fast, efficient global communications and transactions between individuals without outside control is incredibly exciting.

In particular, the potential for cheap, secure global transactions between individuals in countries without the cost of currency exchange, or between countries with high levels of fraud where fees are very costly, will have significant impact on global trade.

Blockchain Technology Beyond Cryptocurrency

As blockchain technology develops, it can be programmed to verify transactions of all kinds without the need for a central authority. This idea of a “distributed consensus” enables people to have trust in a transaction without trusting any other party, person or institution. Trust is built in through the cryptography that guarantees the exchange of value between third parties.

Anything of value can be digitized and tokenized and sent across the internet using blockchain without the need for a trusted third party. Anyone can use cryptocurrency by simply installing an app on their phone. Billions of people who don’t have bank accounts, or can’t prove they exist, will be able to own property and real estate for the first time. This is going to revolutionize the economies of countries in Latin America, Africa and South East Asia.

The Future of Money?

Despite the protests from the banking world and restrictions by some governments who can see their control slipping away, cryptocurrencies are here to stay. Bitcoin is already being used as a “crisis currency”, particularly in countries with corrupt or dysfunctional governments and failing currencies like Venezuela, Zimbabwe and Nigeria.

In developing countries with little financial infrastructure, the uptake of cryptocurrency will become a major force in helping lift up populations out of poverty. In developed countries where concerns over personal privacy are becoming very real, cryptocurrency provides a level of anonymity and freedom that has never been seen before.

As blockchain technology continues to improve and new innovations spark more real-world applications, we will see huge changes to the whole financial system across the globe. This is already happening, the question is “Do you want to be part of it?”