The word “cryptocurrency” is being thrown around more and more often these days. Looking it up in a dictionary, it’d be described as a “digital or virtual currency that uses cryptography for security”, i.e., it’s a sort of an alternative and digital currency. The core of cryptocurrency is blockchain, which serves as a public financial transaction database. Why opt for blockchain instead of central banking systems if both essentially perform the same function? The main reason is that the latter is centralized, whereas blockchain is decentralized. The data provided isn’t stored in a central location, but is distributed among countless groups, making it infinitely more secure.
Bitcoin, one of the biggest names in the cryptoworld, was introduced 10 years ago by Satoshi Nakamoto, the anonymous programmer behind the first cryptocurrency. It was only a matter of time before others followed his footsteps and created other alternatives. Ether, Bitcoin Lite, Ripple, Bitcoin Cash were quickly introduced to the cryptoworld, providing users with more cryptocurrency options.
The rapid growth of its popularity has started to threaten the traditional ways of transacting money. Cryptocurrency is now becoming the norm. The reasons why people are more inclined to opt for virtual currency are A) reduced transaction fees, B) a safer ecosystem, C) peer-to-peer transactions with no third parties involved. Since its creation, 18% of US citizens have adopted the usage of cryptocurrency. Malta is in the process of possibly becoming the first country to have Bitcoin as their national currency. If cryptocurrencies continue growing and expanding at the current rate, crypto-analysts have deduced that by 2050, cryptocurrencies will become mainstream.
Why aren’t we ready to fully adopt cryptocurrencies yet?
Although it’s been around for almost a decade now, cryptocurrency is still a new concept to the world. Although it is a safer option than fiat currencies, it does have its cons. As a complex notion, people have difficulties understanding how it works. Its market volatility can, at times, lead to unstable and unregulated cryptocurrencies. Other risks include illegal activities through the dark web. However, these are all problems that traditional fiat currencies face as well.
Since cryptocurrencies provide decentralized alternatives to fiat currencies, financial institutions tend to oppose it. But, with its accelerated development, more and more cryptocurrencies are emerging, bringing along more opportunities to the cryptoworld. The issues encountered are being addressed and cryptocurrencies are becoming increasingly more stable as more people begin to use them. Perhaps not tomorrow, but it’s only a matter of time until we adopt cryptocurrencies as a replacement for fiat.