What will the future of money look like? Imagine entering a restaurant and looking at the digital menu board of your favorite combination food. Only, instead of being priced at $ 8.99, it is shown as 009 BTC.
Can crypto really be the future of money? The answer to this question depends on the general consensus on several key decisions ranging from ease of use to safety and regulations.
We examine the two sides of the (digital) currency and compare and contrast traditional fiat money with cryptocurrency.
The first and most important component is trust.
It is imperative that people trust the currency they use. What gives value to the dollar? Is it gold? No, the dollar has not been backed by gold since the 1970s. So what gives value to the dollar (or any other fiat currency)? The currency of some countries is considered more stable than others. Ultimately, people’s confidence is that the government issuing this money is firmly behind it and essentially guarantees its “value”.
How does trust with Bitcoin work, as it is decentralized, meaning that it is not a governing body that issues currencies? Bitcoin is in the blockchain, which is basically an online ledger that allows everyone to see each and every one of the transactions. Each of these transactions is verified by the miners (people who operate equipment on a peer-to-peer network) to prevent fraud and also to ensure that there is no double spending. In exchange for their blockchain integrity maintenance services, miners receive a payment for each transaction they verify. Since there are countless miners trying to make money, each one checks to see if the others are working if there are mistakes. This test of the work process is the reason why the blockchain has never been blocked. Basically, this trust is what gives value to Bitcoin.
Next, we look at the closest friend of trust, security.
What if my bank is stolen or there is fraudulent activity on my credit card? My bank deposits are covered by FDIC insurance. Chances are my bank will also reverse the charges I never made to my card. This is not to say that criminals will not be able to achieve stunts that are at least frustrating and time consuming. It is more or less the peace of mind that comes from knowing that I will most likely recover from any wrongdoing that has occurred to me.
In cryptography, there are many options when it comes to storing your money. It is essential to know if the transactions are insured for your protection. There are reputable exchanges, such as Binance and Coinbase, that have a proven track record of correcting mistakes for their clients. Just as there are less respectable banks around the world, the same goes for cryptography.
What happens if I throw a twenty dollar bill into the fire? The same goes for cryptography. If I lose my login credentials for a particular wallet or digital exchange, I will not be able to access these currencies. Again, I can’t stress enough the importance of doing business with a reputable company.
The next number is the scale. Currently, this could be the biggest hurdle preventing people from making more transactions in the blockchain. When it comes to the speed of transactions, fiat money moves much faster than cryptocurrencies. Visa can handle about 40,000 transactions per second. Under normal circumstances, the blockchain can only handle about 10 per second. However, a new protocol is being enacted that will trigger up to 60,000 transactions per second. Known as the Lightning Network, it could result in the transformation of cryptography into the future of money.
The conversation would not be complete without talking about convenience. What do people normally like about their traditional methods of spending and banking? For those who prefer cash, it is obvious that it is easy to use most of the time. If you want to book a hotel room or a rental car, you need a credit card. Personally, I use my credit card wherever I go for convenience, security, and rewards.
Did you know that there are also companies that provide all this to the cryptographic space? Monaco now issues Visa cards that automatically convert your digital currency into the local currency.
If you’ve ever tried to connect money to someone, you know that this process can be very tedious and costly. Blockchain transactions allow a user to send encryption to anyone in minutes, no matter where they live. It is also considerably cheaper and safer than sending a bank.
There are other modern methods of transferring money that exist to both worlds. Take, for example, apps like Zelle, Venmo, and Messenger Pay. These apps are used by millions of millennials every day. Did you also know that they are also starting to incorporate cryptography?
The Square Cash app now includes Bitcoin and Jack Dorsey CEO said, “Bitcoin, for us, doesn’t stop at buying and selling. We believe it’s a transformative technology for our industry and we want to learn as quickly as possible. ”
He added: “Bitcoin offers the opportunity to get more people to access the financial system.”
While it’s clear that fiat spending still dominates the way most of us move money, the new encryption system is gaining ground quickly. Tests are everywhere. Prior to 2017 it was difficult to find conventional media coverage. Now almost all major business news outlets cover Bitcoin. From Forbes to Fidelity, everyone weighs their opinions.
What is my opinion? Perhaps the main reason Bitcoin can be successful is that it is fair, inclusive, and gives financial access to more people around the world. Banks and large institutions see this as a threat to their own existence. They follow the losing end of the largest wealth transfer the world has ever seen.
Still undecided? Ask yourself this question, “Do people more or less trust governments and banks every day that passes?”
Your answer to this question may be what determines the future of money.