Why should you use Cryptocurrency? Let’s see, crypto, to do or not to do? That is the question and it’s a good question — best of all the answer seems to be fairly simple.
Over the last couple of years, the term cryptocurrency has been rapidly gaining ground and understanding of its use and value in the public eye. At first it seemed unfamiliar and somewhat scary, like the credit card looked to users in its early days. You might be more familiar with terms like Bitcoin, and Ether. These are all cryptocurrencies using the Blockchain Technology. As a result of the great work of the Blockchain Technology to keep this currency and technology safe, we are the benefactors.
Currently there are many types of cryptocurrency. A simple google search of the popular trend shows you the start of the growth and where it is taking us.
- Dash
- Ripple
- Dogecoin
- Litecoin
Before you continue reading, let me give you a short primer of cryptocurrency, its prevalence and its customary usage at this time. Cryptocurrency is a digital currency that is created and managed through the use of advanced encryption techniques known as cryptography.
Cryptocurrency made the leap from being an academic concept to (virtual) reality with the creation of Bitcoin in 2009. While Bitcoin attracted a growing following in subsequent years, it captured significant investor and media attention in April 2013 when it peaked at a record $266 per bitcoin after surging 10-fold in the preceding two months. Bitcoin sports a market value of over $10 billion now. Globally
How will cryptocurrency help you?
Below, I will outline some pros and cons of us adopting a global acceptance of Cryptocurrency. And my hopes with this is, you will understand the benefits of cryptocurrency.
Pros and cons of cryptocurrency.
The benefits of cryptocurrency over current fiat currency tech
Example: Central governments can’t take it away
Remember what happened in Cyprus in March 2013?
The Central Bank wanted to take back uninsured deposits larger than $100,000 to help recapitalize itself, causing huge unrest in the local population. It originally wanted to take a percentage of deposits below that figure, eating directly into family savings. That can’t happen with cryptocurrency/bitcoin. You own decentralized currency. No central authority has control, and so a bank can’t take it away from you. For those who find their trust in the traditional banking system unraveling, that’s a big benefit.
Take a look at some of the improvements that can be made to fiat currency by shifting towards digital cash:
ADVANTAGES OF CRYPTOCURRENCY
- Fraud: Cryptocurrencies are digital and cannot be counterfeited or reversed arbitrarily by the sender, as with credit card charge-backs.
- Immediate Settlement: Purchasing real property typically involves a number of third parties (Lawyers, Notary), delays, and payment of fees. In many ways, the bitcoin/cryptocurrency blockchain is like a “large property rights database,” says Gallippi. Bitcoin contracts can be designed and enforced to eliminate or add third party approvals, reference external facts, or be completed at a future date or time for a fraction of the expense and time required to complete traditional asset transfers.
- Lower Fees: There aren’t usually transaction fees for cryptocurrency exchanges because the miners are compensated by the network (Side note: This is the case for now). Even though there’s no bitcoin/cryptocurrency transaction fee, many expect that most users will engage a third-party service, such as Coinbase, creating and maintaining their own bitcoin wallets. These services act like Paypal does for cash or credit card users, providing the online exchange system for bitcoin, and as such, they’re likely to charge fees. It’s interesting to note that Paypal does not accept or transfer bitcoins.
- Identity Theft: When you give your credit card to a merchant, you give him or her access to your full credit line, even if the transaction is for a small amount. Credit cards operate on a “pull” basis, where the store initiates the payment and pulls the designated amount from your account. Cryptocurrency uses a “push” mechanism that allows the cryptocurrency holder to send exactly what he or she wants to the merchant or recipient with no further information
- Access to Everyone: In fact, here are approximately 2.2 billion individuals with access to the Internet or mobile phones who don’t currently have access to traditional exchange systems. These individuals are primed for the Cryptocurrency market. Kenya’s M-PESA system, a mobile phone-based money transfer, and microfinancing service recently announced a bitcoin device, with one in three Kenyans now owning a bitcoin wallet. (Let me repeat that again. 1/3)
- Decentralization — A global network of computers use blockchain technology to jointly manage the database that records Bitcoin transactions. That is, Bitcoin is managed by its network, and not any one central authority. Decentralization means the network operates on a user-to-user (or peer-to-peer) basis. The forms of mass collaboration this makes possible are just beginning to be investigated.
- Recognition at universal level– Since cryptocurrency is not bound by the exchange rates, interest rates, transactions charges or other charges of any country, therefore it can be used at an international level without experiencing any problems. This, in turn, saves lots of time as well as money on the part of any business which is otherwise spent in transferring money from one country to the other. Cryptocurrency operates at the universal level and hence makes transactions quite easy.
“THE BLOCKCHAIN KEEPS EVERYONE HONEST, AND A WHOLE LAYER OF BANKING BUREAUCRACY IS REMOVED, LOWERING COSTS.” – PAUL VIGNA
MOST IMPORTANT. YOU OWN IT
There is no other electronic cash system in which your account isn’t owned by someone else.
Take PayPal, for example: if the company decides for some reason that your account has been misused, it has the power to freeze all of the assets held in the account. This can happen without consulting you (Trust me, this has happened to me). It is then up to you to jump through whatever hoops necessary to get cleared to access your funds. With cryptocurrency, you own the private key and the corresponding public key that makes up your cryptocurrency address. No one can take that away from you. (Unless you lose it yourself, or host it with a web-based wallet service that loses it for you).
THE BAD THINGS ABOUT CRYPTOCURRENCY
Overall, cryptocurrencies have a long way to go before they can replace credit cards and traditional currencies in global commerce.
CRYPTOCURRENCY DISADVANTAGES:
- Fact is many people are still unaware of cryptocurrency aka Digital currency
- Moreover, people need to be educated about it to be able to apply it to their lives.
- Businesses need to start accepting it
- They need to make it easier to sign up and get started.
HIGH RISK OF LOSS
Timothy B. Lee, adjunct scholar at the Cato Institute and regular contributor to Forbes.com, identifies four reasons to be cautious about bitcoins:
- Lack of Security. There is no safety net to protect your bitcoins from human error, technical glitches (hard drive failures, malware), or fiduciary fraud. According to an article in the UK edition of Wired, 18 of 40 web-based businesses offering to exchange bitcoins into other fiat currencies have gone out of business, with only six exchanges reimbursing their customers. The authors of the study estimate that the median lifespan of any bitcoin exchange is 381 days, with a 29.9% chance that a new exchange will close within a year of opening.
- Increased Regulation. Relatively benign guidelines are currently in place. However, law enforcement agencies could decide that bitcoins are a “giant money laundering scheme.”They could then enact more stringent regulations that would diminish the currency’s value.
- Limited Scaling. The design of the system limits the speed and number of transactions processed. This makes it unlikely that bitcoins will replace conventional credit card transactions.
- Lack of Applications. While acknowledging bitcoins’ popular use for illegal transactions, Lee questions how useful bitcoins really are. There are a few things Bitcoin would need to be truly disruptive to existing fiat currencies or electronic payment systems. For instance, applications for low-cost international money transfers, the creation of complex electronic contracts, or use in Kickstarter-style fundraising campaigns or micropayment transfers.
FINAL THOUGHTS
Overall, the future appeal of cryptocurrencies lies in allowing you ultimate control over your money. This includes fast secure global transactions, and lower transaction fees when compared to all existing currencies. When used properly it will be the initiator of many emerging systems that will change our global economic system.
