Since bitcoin’s creation in 2009, the world has been going back and forth on the future of cryptocurrency. There are strong opinions on both sides, with one claiming that it’s a practical and unavoidable byproduct of digital progress and others warning of impending doom. With such opposing opinions being thrown about, it is hard to know what to believe. Let’s take a closer look.
What are the Benefits?
Any champions of cryptocurrency are quick to list its convenience. It is available to virtually anyone with internet access. Transfers are quick, confidential and painless, requiring fewer details and no third parties. It’s arguably the easiest, cheapest and fastest way to get money from one side of the globe to the other.
Because there are no banks involved, borders are nearly irrelevant in the cryptocurrency world. Digital currency opens up the global economy to the developing world like never before, expounding its potential exponentially. Additionally, exchange rates stay out of the picture, as do exchanging fees. Cryptocurrencies have a universal, set value, making transactions simpler and cheaper.
This proves particularly handy when purchasing expensive property, such as real-estate or art, by cutting out a proportionately large third-party expense (i.e .for brokers or lawyers). The cryptocurrency database provides a secure channel for two-party transactions.
Risks of Cryptocurrency
Cryptocurrencies are still new enough to be plagued by price fluctuations. If the public can stomach the uncertainty and continue adopting the relevant technologies, then the future is bright for digital currencies. The naysayers claim that this will take too long and volatility will turn the mainstream user off.
While security has always been considered a strength compared to other currencies, large-scale crypto thefts have taken center stage recently. The latest and biggest theft is the $500 million stolen from Japan’s Coincheck last week. The same security measures that keep this digital wealth safe, also make it easy for owners to be locked out, with no else able to access their “account” either. To date, more than 3 million bitcoins have simply disappeared.
Hackers love going after cryptocurrencies because as soon as they are stolen, they function as instant, usable cash, unlike social security or credit card information. To counter the onslaught of hackers, people are beginning to save their wealth offline in a digital “safe.”
Once transactions are made there is no going back, i.e. no buyer protection. This problem could be solved by involving a third party, but then we lose the ease and two-party characteristics that made cryptocurrency advantageous in the first place.
Do we even need to mention bitcoin at this point? Bitcoin was the trailblazer in the cryptocurrency universe, the first to harness the potential of a decentralized, public database. Today, it is still considered the standard, but others are cropping up left and right.
Litecoin, developed by MIT grad Charlie Lee, is accepted by many merchants, who appreciate its particularly fast processing times. Ethereum, second only to bitcoin in terms of market capitalization, offers up its own currency — ether — to users of its platform. Zcash provides a more private form of cryptocurrency, with only select details made visible. Ripple is a centralized platform used by banks to make transactions. Then there’s Dash, Cardano ADA, Stellar XML…the list goes on and on.
While the number of cryptocurrencies will continue growing along with digitalization, no two are exactly the same. Many have been designed for specific purposes or with unique values (speed, secrecy, etc.). The digital currency landscape evolves constantly. Blink and it will have changed again.
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