Who would have thought in the last century that money would go digital? Even those who, on the brink of change, insisted on not seeing the profound effect that digital technology was operating, are using common tools such as ATMs or credit cards. We see at this time the presence of a new monetary revolution that, like all innovations, fascinates and scares us, we are talking about cryptocurrencies and the impact they are having.
With the passage of time, the money acquired different forms, until it reached the current fiat money, issued by the respective central banks of the countries, whose value is based on the credibility of the public demanding it in the monetary authority. Currently, many, if not all, of us handle cryptocurrency, how is that? You will wonder, then very simply, every time we use banking platforms and make transactions through the internet we are using crypto money.
Now cryptocurrencies have arrived, a mechanism that little by little has taken over the market, to the point that to date there are commercial premises of different kinds and in different countries where it is already used as an exchange currency. Cryptocurrencies have been replacing, little by little, even the electronic transactions of the normal money that we usually use on a daily basis. Without paying attention, little by little they have been incorporated into the transactions we carry out on a daily basis, therefore there is a high probability that they will become the currency of the future.
The cryptocurrency: The closed system
The high standard of security guaranteed by the blockchain has led some companies, banks, or even states (like Sweden) to launch their own virtual currency. This is the substantial change brought about by some of these coins. Bitcoin, in fact, was born as a decentralized system to counteract the banking power, in these cases, we are witnessing a change in trend that returns to the control of a central system. Therefore, we are talking about virtual currency and not cryptocurrency, since it is not convertible into current money.
The currency can only be spent within a circuit and its value will be determined by the demand of the new members of the system. Account-holders will have to weigh all the advantages and disadvantages of entering a “protected” system.
Cryptocurrencies and their evolution
The substitute crypto assets, although imperfect, of the money issued by the monetary authority, are a kind of “private” money, whose stock is not controlled by any central bank, and its price depends on supply and market demand. While the idea of this new decentralized currency that uses cryptography as a means of control was raised by Wei Dai in 1998, it was not until 2009 that the first cryptocurrency, Bitcoin, was created.
Within this category, Bitcoin is not only the first to start trading, but also the most famous. There are also Litecoin, Ripple or Dogecoin, among others, and they focus on the idea that their encryption system for the currency is superior to that of traditional banking.
The superiority of this “new money” is based on the independence of the economic system in which it operates, it only has value to the extent that the market supports it, which is made up of a community that demands and scarcity in the offer, given that the amount of programmable currency is limited, and it is estimated that they will be manufactured until 2033, a year that is expected to reach the maximum and immovable limit of 21 million bitcoins in circulation.
This upward trend explains that it is currently one of the most profitable forms of saving, since fiat money loses value day by day in all countries, while this “new money” not only does not increase its value but also the Growth rate in recent years has been abysmal.
Today, anyone with a modern browser runs a pretty sophisticated cryptosystem. This is what we use to protect our actions on the Internet. This is what makes it safe to enter passwords and submit financial information to websites. So what the banks gave us, the secure transfer of virtual money, we can get with smart use of crypto. This means that we no longer have to rely on banks to protect our transactions. We can do it alone.
The main advantages of cryptocurrencies:
Cryptocurrencies are increasingly used in today’s society to carry out financial transactions, and we have clearly seen what the differences are between fiat money and cryptocurrencies. Now let’s see what are the benefits and disadvantages that they offer us.
In the absence of traditional payment methods, it is now possible to carry out financial transactions on the Internet, thanks to cryptocurrencies. These are concrete solutions that allow the development of online commerce around the world in a few moments. This virtual currency is used more and more in shops, financial transactions, and many other monetary transactions.
Cryptocurrencies are also very reliable. In fact, all financial transactions are encrypted and kept in a safe place. Thus, the user is the only person who owns the code and secures any transaction in accordance with security regulations. Also, it is impossible to change the blockchain. Hence, there can be no hacker scams, let alone the relevant authorities and governments.
Decentralization is one of the strengths of cryptomania. In fact, this virtual currency is not regulated by any competent authority. Transactions are carried out peer to peer between each user. Therefore, we see many decentralized casino platforms these days available in different countries that offer much better security, and transparency. Not just gambling, decentralization is being adapted to many other industries.
This virtual currency is also very simple to use and transactions are very easy. To use it, simply create an account on an exchange platform and invest whatever amount you think is best. Opening an account is done quickly and without any paperwork, except for proof of identity on some sites. As a result, it is much easier to have an account than in a traditional institution like a bank.
There is no deposit fee for account maintenance. It is important to know that transactions are carried out instantly and in the best possible conditions.
In addition, virtual currencies such as Bitcoin, Ethereum, Litecoin, or Dogecoin, among others, are accessible to everyone. This means that everyone can use them without any problem, that is, individuals and companies.
Lastly, the gains are much higher if cryptocurrencies are used. This is due to its high volatility, which allows a quite attractive return on investment. It is important to know that many people have become millionaires, thanks to the virtual monetary system.
Finally, we can say that deciding to use cryptocurrencies or not is something very personal, but so far everything indicates that it can be a good way to invest, of course, studying well and documenting ourselves to invest in the cryptocurrency that suits us best to prepare for the future.