When the most popular cryptocurrency, Bitcoin, was introduced in 2009, it was met with skepticism by many because some people did not believe in the concept of “digital money.”
Bitcoin didn’t start increasing in popularity until 2011 when its value hit a dollar. Within a few months, its price increased from $1 to $30. Despite numerous doubts and predictions, cryptocurrency has survived and increased steadily over the years.
As cryptocurrencies continue to increase in popularity, more people are willing to invest in it.
Let’s take a look at how important cryptocurrency is in today’s world, but before we do this, let’s define cryptocurrency.
What is Cryptocurrency?
Simply explained, cryptocurrency is digital money. Its principle involves exchanging information over a network of computers rather than relying on a centralized authority such as a bank.
To begin, hopefully, you’ll agree with me that a global economy needs a digital currency. Digital currency facilitates global transactions by allowing for faster transaction times, lower fees, and limitless access.
Secondly, cryptocurrencies operate on a decentralized system. This, in my opinion, is its most compelling selling feature.
When institutions and individuals control the supply of money for many people, friction is bound to occur. Daily frictions in a centralized system include things like paying a high fee to move money across borders and wrong suspicion of accounts.
How about having money that is not stored in a place or controlled by a group of people, but stored in computers networks distributed across the globe? Great idea!
Cryptocurrency offers you simple access to transactions from anywhere. There are still certain areas that do not have banks, and some people are denied access to a bank account for a variety of reasons.
How would you feel if you could make cross-border transactions on your phone? All you need for cryptocurrency transactions is a phone and a network connection.
Is Cryptocurrency a Bubble?
Some argue that Bitcoin is a bubble since its value is determined by the people. Every currency or system of exchange are given its value by the individuals who use it; no system of exchange has inherent values.
Prior to the introduction of paper money, for example, people used other items such as metal as a means of trade. Does that make any sense? No, not to you, but to them.
Why? It was agreed that metals would serve as their medium of exchange. Just like we agreed today, paper money is our means of exchange.
It all started with the introduction of Bitcoin as a payment system in some organizations, and now we’re seeing other cryptocurrencies being embraced as payment methods. The usage of cryptocurrency as a means of exchange for physical commodities is growing.
This seems very possible in the near future, with some world governments even creating their own digital coins.
Cryptocurrency is the first step in the evolution of what the future of finance will look like.