Cryptocurrency: The Future of Finance

Since the invention of Bitcoin in 2009, it has caught the attention of people and interest has developed over time as it has now caught mainstream attention. However, as a new invention, most people become skeptical about it or even reject it. For instance, a layman becomes confused at the sound of ‘Bitcoin, cryptocurrency, blockchain, ICOs, etc.’ However, beyond the technical aspect, cryptocurrency is a new tech invention modifying payment & redefining the financial system.

The financial crisis of 2008 led to the reception of this invention aimed at building a better financial system than the fiat system. In its early days, Bitcoin was used for some illegal purposes, i.e., money laundering, purchase of illegal items on Silk Road, etc. It is arguably the most disruptive technology since the dot com bubble, i.e., the internet.

What Is Bitcoin?

Bitcoin is a digital currency used to make secure transactions all across the globe. It is also classified as a store of value that can be used to send value to anyone without the interference of a third party. Referred to by some as “digital gold”, it is an asset that cannot be hacked or stolen when properly stored. It is created on a secure digital network known as the blockchain. Bitcoin is easy to use, fast & cheaper to send from one part of the world to another without paying exorbitant fees. It is divisible up to eight decimal places, i.e., 0.00000001 BTC for transactions.

Bitcoin is a currency that follows the economic law of demand and supply from its users to determine its value, unlike fiat currencies that can be manipulated & suffer from government economic policies, etc. The maximum supply of Bitcoin is capped at 21 million Bitcoin (with over 16 million in circulation) which makes it a scarce asset. Bitcoin would revolutionize money the same way the internet did.

It runs on a decentralized, public ledger known as the blockchain. Bitcoin transactions are recorded on the blockchain which can then be viewed by the public. The Bitcoin blockchain is a network with no central authority. Therefore, there’s no central figure that controls its operations. Hence, it is decentralized. Users can send money easily across borders just with an internet connection & private wallet details. As a user, all you need to carry out transactions is your wallet’s private key that gives access to your token.

Blockchain Technology; What You Need to Know

A blockchain is a secure layer of code that helps to keep track of digital assets. Unlike traditional databases that are connected by a single server, the blockchain has a decentralized chain of command. It is managed by a distributed network of computers around the globe known as nodes. The responsibility of these nodes is to track every singular transaction carried out on the network and add it to the existing block of transactions. Simply put, the blockchain is an accounting system. Interestingly, every recorded transaction data cannot be modified or deleted once it’s added to the network. This is done to maintain transparency.

Brief History of Money

The evolution of money dates back to the barter system where people exchanged value with goods & properties. This was followed by the use of silver & gold coins by traditional institutions. These coins also exhibited some properties of money, i.e., scarcity. Later on, the banking system revolutionized money with the introduction of paper notes. This way, banks allowed people to bring in their gold in exchange for paper money.

In 1971, the POTUS, President Nixon gave the government full rights to print money. Hence the introduction of fiat currency. This system of money wasn’t backed by tangible assets other than the government’s backing. Fiat currencies suffered from manipulation by governments and in less than 100 years since its introduction, the United States dollar has lost 90% of its purchasing power due to inflation.

For this reason, many financial advisors recommend investing in other assets, stocks, gold, real estate, etc rather than holding cash for wealth preservation purposes.

For the record, the USD is one of the best currencies in the world. However, compared to a lot of other assets, it’s not a good store of value. Before now, most of the world’s trusted store of value are precious stones, i.e., Gold, Silver, Diamond, etc. However, in recent times, cryptocurrency has been considered a very reputable store of value. For instance, a Federal Court in Washington DC ruled that Bitcoin is a Store of Value.

The Influence of Bitcoin on Developing Economies

The US economy is one of the most stable economies in the world. So, it’s understandable if people in the US don’t care about Bitcoin. However, people in countries such as Argentina, Zimbabwe, etc., experiencing serious recession & hyperinflation would be more inclined to get into Bitcoin as it provides a great solution to operate outside their dwindling economies.

Most developing economies don’t have access to financial services. Many times, this is due to the stringent regulatory measures put in place by these commercial banks. However, people can get access to financial services with just a smartphone & internet connection with Bitcoin. With a few buttons pressed on your smartphone or PC, you can own, store, and carry out transactions with Bitcoin.

Did you know…

There are several over-the-counter cryptocurrency exchanges opening up in many developing countries now. For instance, all 7-Eleven stores in the Philippines allow users to come in to exchange Bitcoin. Bitcoin & Cryptocurrencies are taking over the world & developing economies aren’t left out.

Bitcoin’s Unique-Selling-Point & Value Proposition

Although payments are an integral part of Bitcoin’s core use-case, however, it isn’t the only one. Bitcoin is a currency that cannot be censored by the government as well. For instance, according to the Swiss Bank, around $20 trillion of the world’s wealth is stored in offshore bank accounts by several high-net-worth individuals & corporations. This measure is not illegal, rather it is a lawful way they shield their assets from taxation, legal cases, etc. In the same vein, Bitcoin and other crypto-assets can be used as a hedge or store of value and other higher purposes.

Reasons Why It’s Important to Own Bitcoin

There are several reasons why you can buy Bitcoin. It could be as a form of investment, store of value, currency, etc. However, it’s important to note that owning bitcoin or any other cryptocurrency is a choice. However, I am here to guide you in making the best decision.

Here is my recommendation:

• As an individual, you can hold Bitcoin & other cryptocurrencies to have a secure financial future. You can have a diverse portfolio consisting of your most preferred digital assets.
• Cryptocurrencies could play an important role in the world’s economy in the future. In the same vein, blockchain-based assets could represent one of the greatest tech innovations of our time just like the internet made many people millionaires & billionaires.
• Bitcoin has moved from less than a dollar in price to over $60,000 all-time-high in less than 15 years. This may be the best time to make that investment decision.

** This information is intended for educational and training purposes only and should not be construed as investment advice. As with all financial decisions you should contact your licensed financial advisor before investing in any financial instrument.**

Source: https://medium.com/geekculture/cryptocurrency-the-future-of-finance-11bece1f988c?source=rss——-8—————–cryptocurrency