What will the financial landscape look like in the future? Picture yourself entering a restaurant and selecting your preferred combo meal from the digital menu board. However, the price is displayed as.009 BTC rather than $8.99.
Can cryptocurrency truly be the form of payment of the future? The general agreement on a number of crucial decisions, ranging from ease of use to security and regulations, will determine the answer to that question.
Let’s look at the (digital) coin from both sides and contrast cryptocurrencies with fiat currency.
The initial and most crucial element is trust.
People must have confidence in the money they use. What is the source of the dollar’s value? The dollar has not been backed by gold since the 1970s, so it is not gold. So what exactly gives the value of the dollar (or any other fiat currency)? The currency of some nations is regarded as being more stable than that of others. Ultimately, it’s people’s trust that the issuing government of that money stands firmly behind it and essentially guarantees its “value.”
How does trust function with Bitcoin since there isn’t a central authority that issues the currency? The blockchain, which houses bitcoin, is essentially an online accounting ledger that makes every transaction publicly visible. To avoid fraud and ensure that there isn’t double spending, miners—individuals operating computers on a peer-to-peer network—verify each of these transactions. Each transaction that is verified by the miners earns them money in return for their services in preserving the blockchain’s integrity. Every miner double-checks each other’s work for errors because there are so many of them trying to make money. Due to this proof of work procedure, the blockchain has never been compromised. In essence, the value of Bitcoin comes from this trust.
The closest friend of trust is security, so let’s examine it next.
What if someone robs my bank or uses my credit card fraudulently? The FDIC insures the deposits I make with the bank. Most likely, my bank will also cancel any unauthorized charges made to my card. That doesn’t mean, however, that criminals won’t be able to pull off elaborate schemes that will at the very least be time- and frustration-consuming. It’s essentially the mental tranquility brought on by the knowledge that any wrongdoing committed against me will probably be made right.
The options for where to store your money are numerous in the crypto world. To ensure your safety, it is critical to understand whether transactions are insured. There are trustworthy exchanges that have a track record of making things right for their customers, like Binance and Coinbase. In the same way that there are shady banks everywhere, the same is true of cryptocurrencies.
What happens if I chuck a $20 bill into a fire? It’s the same with crypto. I won’t be able to access those coins if I misplace the login information for a specific digital wallet or exchange. Again, I can’t emphasize enough how crucial it is to work with a reputable company.
Scaling is the following problem. This may be the biggest roadblock standing in the way of more transactions being made on the blockchain right now. Fiat money moves through transactions much more quickly than cryptocurrency. 40,000 transactions can be processed by Visa every second. The blockchain is only capable of handling about 10 transactions per second in normal circumstances. However, a new protocol is being implemented that will dramatically increase this to 60,000 transactions per second. Its implementation, the Lightning Network, may make cryptocurrency the preferred form of payment in the future.
Without bringing up convenience, the discussion would be lacking. What features of traditional banking and payment methods do people most enjoy? It’s usually simple to use for those who prefer cash, of course. You require a credit card in order to reserve a hotel room or a rental vehicle. Personally, I always use my credit card because of the ease, security, and rewards.
Did you know that businesses exist that offer all of this in the crypto space as well? Monaco is now offering Visa-branded cards that will exchange your digital currency for you at the current exchange rate.
If you have ever attempted to wire money to someone, you are aware of how time-consuming and expensive the process can be. Regardless of where they are located, a user can send cryptocurrency to anyone in just a few minutes using blockchain transactions. Compared to sending a bank wire, it is also significantly cheaper and safer.
Other contemporary means of money transfer are available in both worlds. Consider programs like Venmo, Zelle, and Messenger Pay as an example. Millions of millennials use these apps on a daily basis. Did you also know that they are beginning to use cryptocurrency?
The Square Cash app now includes Bitcoin and CEO Jack Dorsey said: “For us, using Bitcoin extends beyond simple buying and selling. We do think that this technology will transform our sector, so we are eager to learn as much as we can.”
He added, “Bitcoin offers an opportunity to get more people access to the financial system”.
Although it’s obvious that the majority of us still move money primarily through fiat spending, the nascent crypto system is rapidly gaining ground. All around us, there is proof. Finding coverage in the mainstream media was challenging prior to 2017. Almost all significant business news outlets now cover Bitcoin. Everyone is expressing their opinions, from Forbes to Fidelity.
In my opinion, the fact that Bitcoin is equitable, inclusive, and expands financial access to more people globally is the main reason it might succeed. Large organizations like banks see this as a threat to their very survival. The biggest wealth transfer the world has ever seen could leave them on the losing end.
Still undecided? Ask yourself this question: “Are people putting more or less trust in banks and governments as time goes on?”
It’s possible that the future of money will depend on how you respond to that question.