The current cryptocurrency ecosystem is built on top of Bitcoin. Bitcoin was created in 2009 by an anonymous programmer, Satoshi Nakamoto, and it uses blockchain technology to ensure the anonymity of transactions and to facilitate the anonymity of senders and receivers.
However, although Bitcoin is still the most popular cryptocurrency, it has been eclipsed by newer, more efficient cryptocurrencies like Ethereum. In addition, cryptocurrency has the potential to be used as a way to exchange value between individuals securely and anonymously.
What is the primary purpose of cryptocurrency?
The primary purpose of cryptocurrency is to enable commerce at a lower cost than is possible with traditional forms of currency. However, many people view digital assets as valuable in and of themselves. They believe that the actual value can only be determined by whether or not there is widespread adoption by consumers and merchants worldwide. On the other hand, some people do not care about the underlying technology supporting digital assets as long as they can get what they want from exchanging them for cash or other currencies.
How can cryptocurrency ease global exchange?
A fundamental Surge in Economic Activities:
A cryptocurrency is a form of digital currency based on Blockchain technology. It allows people to exchange no-strings-attached value for goods and services. The Surge in economic activities arises because cryptocurrency allows for easy, low-cost payments and can be used by anyone.
A Boost in Entrepreneurship:
The world has seen an immense upsurge in entrepreneurship and small businesses due to the advent of cryptocurrency. Crypto startups have been popping up left, right, and center since the inception of this decade’s first digital coin (Bitcoin) more than eight years ago. Undoubtedly, the adoption of cryptocurrencies can lead to a growth in entrepreneurship and small businesses worldwide.
A Crypto-Based ‘Competition’ for Fiat Currency:
Another primary reason for the mass adoption of cryptocurrency is its growing competition with fiat currency (fiat money). Fiat currency has always been under scrutiny due to its volatile nature, susceptibility to inflation and other types of financial fraud. However, cryptocurrencies like Bitcoin and Ethereum promise a much faster way of exchanging value at a lower cost than national currencies. The world has already witnessed a rise in users opting for digital currencies as an alternative way of storing their value instead of bank deposits.
Cryptocurrency as a Means of Payment is ‘Better’ Than Fiat Currency:
While the United States Dollar, Euro and other national currencies have been losing value in recent years, digital assets have been gaining traction. Cryptocurrencies like Bitcoin and Ethereum have garnered enormous popularity because they can be used as a form of payment to exchange value.
High Transaction speeds and Low transaction costs:
Cryptocurrency transactions enable fast and low-cost value exchanges in a secure environment. They are also relatively easy to carry out since most use a peer-to-peer design model, with no central authority controlling or verifying the transactions. However, since cryptocurrency technology uses Blockchain to facilitate transactions, the processing of payments can be completed within seconds and at meager transaction costs.
Low Cost of Ownership of Crypto Assets:
Cryptocurrencies are digital assets whose value is not based on national fiat currency. As a result, many advantages exist with no third-party controlling the issuance and distribution of tokens. For example, unlike fiat currencies, there is no need to perform credit checks, establish a username and password, share personal details or undergo identity verification procedures.
It is also not necessary to own a bank account to use them as a form of payment. The only requirement for trading with cryptocurrencies is owning an adequate amount of these currencies in the first place.
How Are Cryptocurrencies Different From Fiat Currencies?
As mentioned earlier, cryptocurrencies are digital assets that are not issued, controlled or facilitated by any centralized authority. Traditional monetary bank notes are released and controlled by their respective national governments. On the other hand, cryptocurrencies will only become legal tender in the future when they are adopted as a legal currency by a governing body. However, some countries like Japan have already accepted Bitcoin as a legal currency.