The crypto market is booming. Even those who didn’t know about Bitcoin in the past few years are now aware of its existence, and new businesses are jumping into the crypto world every day. But what if cryptocurrencies became the new norm? How would the financial system change?
Are you ready for cryptos?
Cryptocurrencies, such as bitcoin, are a phenomenon that is rapidly gaining momentum. With BTC trading at more than $20,000 per coin and rising exponentially every year, some speculate that it could potentially become a revolutionary alternative to our current financial system. With bitcoins seemingly being used to purchase everything from coffee to cars nowadays, its legitimacy in today’s economy is becoming more apparent every day. Cryptocurrencies are revolutionizing not only how we spend our money but also how we save it.
Blockchain and Bitcoin 101
The blockchain, a novel financial technology invented by Satoshi Nakamoto, is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value. It’s essentially a distributed database for your currency that anyone can verify and use in real time. But many people don’t realize how big of an impact it will have on our everyday lives.
Cryptocurrencies will become mainstream, but don’t invest more than you can afford to lose
The concept of currency itself is on a steady march toward disruption. The challenge will be to prove that cryptocurrency can scale into a mainstream means of exchange, not just an investment vehicle. If adoption(ido ) picks up, how might society change?
Here are two projections for how BTC and other cryptocurrencies could shape our lives:Cryptocurrency will become as common as paying with debit cards or cash.Our world has changed significantly in recent years with cash payments on a steady decline across many regions.
Cryptocurrencies may completely transform our way of transacting business
Cryptocurrencies, such as Bitcoin, are perhaps one of today’s most popular topics in finance. Their decentralized nature and transparent records systems have drawn many comparisons to other peer-to-peer (P2P) networks such as Napster or BitTorrent. While these comparisons may not be 100% accurate, there is no doubt that P2P networks are changing our way of transacting business — even big businesses like Amazon and Google rely on P2P models for a large portion of their operations.
Cryptocurrencies will bring transparency
Cryptocurrencies decentralized every single transaction can be tracked. For banks, that means they will no longer be able to hide shady business practices. If a bank is engaging in illegal activities or fraudulent behavior, there will be an open record of it for all to see. Although these activities may still occur (just as they do today), it’s more difficult for them to get away with because everything is recorded on a public ledger.
Cryptocurrencies don’t need a central bank
One of Bitcoin’s most touted features is that it’s not controlled by a central bank, like fiat currency is. Theoretically, anyone in possession of BTC can take part in running transactions, mining and verifying information. This decentralization is one of Bitcoin’s main draws as a cryptocurrency and removes third parties from economic transactions altogether. Banks can also charge large fees for transactions, which might not be necessary with cryptocurrency¹ ² ³.
Cryptocurrencies will make your transactions fast, efficient, inexpensive and private
Cryptocurrencies like Bitcoin, Litecoin and Ether provide users with all these benefits and more. There are no complicated sign-up processes and transactions are as easy as sending an email. And even though you’re responsible for securing your own coins, you don’t have to worry about identity theft or credit card fraud. Your identity remains private while all transactions take place anonymously on a decentralized ledger.
Initial Coin Offerings (ICOs) may create a new way to raise funds
An Initial Coin Offering (ICO) is a fundraising mechanism in which new projects sell their underlying crypto tokens in exchange for bitcoin and ether. It’s somewhat similar to an Initial Public Offering (IPO), but with a few key differences. For one, ICOs don’t have any regulatory requirements; they can be used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists.
Banks should learn from the cryptos they criticize so much. Section: Regulators must be careful not to stifle innovation with too many regulations
The cryptocurrency sector is at a crossroads, with innovators and regulators clashing head-on. The G20 recently discussed cryptocurrency regulation, which is certainly a step in a good direction. However, it was also agreed that regulations should not be too restrictive and unnecessarily stifle innovation. This is key: Cryptocurrencies can only reach their true potential with certain degree of regulation in place.