Will Cryptocurrencies Become the Currency of the Future?

Will Cryptocurrencies Become the Currency of the Future?

Will Cryptocurrencies Become the Currency of the Future?

In 2021, we saw the status quo turned on its head.

With the global market crash, we saw national currencies plummet in value, as developments such as the pandemic and related legislation left investors scrambling to avoid bankruptcy. As the market struggles to right itself, you may be left wondering: how can I avoid falling prey to inflation and devaluation? 

There are a lot of ways to avoid falling prey to financial pitfalls, some of which you may already be aware of. You can diversify your portfolio, putting your funds in assets that span a wide range of different sectors. You can put money into tangible assets like real estate that have intrinsic value, protecting yourself from some of the pitfalls of other types of investment. 

However, there is one other option you may not have considered: cryptocurrency! Cryptocurrency is an exciting new way to conduct transactions, offering a stable and secure alternative to conventional national currencies. While it’s not without its drawbacks, crypto has the potential to become the currency of choice in the world of finance and investment. 

The Flaws of Fiat 

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Before we explore the ins and outs of the various different cryptocurrencies, we’ve got to explain this novel new technology in a bit more detail. Before we do that, however, we’ll need to detail the origins of conventional currency in order to better understand why this new alternative is so attractive and why you should consider investing in it. 

Let’s talk about the origins of conventional currency. Devised as an alternative to the bartering system, conventional currencies were originally coins minted from valuable or semi-valuable metals that bore the signet and markings of the government or institution that issued them. Their value was more or less intrinsic due to the value of the metals they were minted from. 

This system was not without its own issues, as you might imagine. Coins are heavy, they occupy a great deal of space, and are prone to counterfeiting and other falsification methods. To remedy these problems, central banks began issuing banknotes that represented a given value in gold, silver, or other precious metals but had no intrinsic value in and of themselves. 

Paper currencies were remarkably effective in alleviating the issues endemic to earlier currencies. Banknotes are space-efficient, difficult to falsify due to serialization and other anti-counterfeiting measures, and are generally just more convenient. The weaknesses of paper currency as a concept, however, would soon become apparent. 

The greatest weakness of a paper currency is also one of its strengths: its lack of intrinsic value. Because banknotes could only rarely be exchanged for their face value in precious metals, governments would often lean on their ability to simply “print more money” to deal with economic upheaval. Throughout history, this phenomenon has spelled ruin for countless governments, leaving millions in financial distress. 

A Sensible Alternative

Enter: cryptocurrency. In 2009 a shadowy figure is known only by their pseudonym “Satoshi”, introduced the world to a revolutionary new technology called Bitcoin. In the years since, Bitcoin and the numerous alternatives it inspired have rapidly gained traction with a broad audience, accruing value exponentially and causing a major upset in the financial world. 

What is so special about this technology, you ask? Well, let’s take a look. Bitcoin and other cryptocurrencies share a wide variety of advantages when compared to conventional currencies. They are all but completely invulnerable to theft, they’re easy to use, and they offer complete anonymity. 

Many of these benefits can be chalked up to a technology called the blockchain. Blockchain is a series of “blocks” of data that, once closed, cannot be modified. This is used to create a public ledger, or a database, of all transactions conducted on the network of a specific cryptocurrency, making transactions conducted on these networks visible to all users.  

Transactions with cryptocurrency are simple but largely bulletproof. Most cryptocurrency networks issue each user two alphanumeric keys, one public and one private. Transferring funds is easy; all you need is the recipient’s public key. Once you have that, simply choose how much you want to transfer and you’re good to go. 

Regarding security, cryptocurrency is unparalleled when it comes to keeping its users’ money safe. One can only access the funds in a wallet if you have the key to that wallet. If the key is kept secure, both security and anonymity are all but guaranteed. Obviously, there are downsides to this, but it is built-in security features are incredibly attractive. 

Should you Invest in crypto? 

With all of this said, it’s easy to see why so many laud the advantages of a cryptocurrency over conventional currencies. Nevertheless, there are still a number of downsides to this novel technology, and you shouldn’t invest in it if you aren’t thoroughly familiar with the ins and outs of both the technology and the community. 

Perhaps the largest disadvantage of crypto is its instability. The value of Bitcoin and other cryptocurrencies fluctuates dramatically on a regular basis, resulting in ruination for inexperienced or ignorant investors. While this can be a boon for those who know how to use it to their advantage, it’s best to be cautious when investing in crypto.  

Another con of crypto is the proliferation of scams and get-rich-quick schemes that pose as cryptocurrency platforms. While these are easy to spot if you know what to look for, many otherwise judicious investors have lost hundreds of thousands or even millions of dollars to these insidious scams. 

Finally, cryptocurrencies suffer from difficulties related to scale. While they may seem bulletproof when implemented on the scale they are today, their ability to scale is dubious. Without a tangible, inherent value to back it as a means of monetary transfer, cryptocurrency is not likely to replace conventional currencies anytime soon. 

If you’re sure you want to invest in cryptocurrency, you’ll need to do a lot of research to determine how best to go about doing this. There are a wide variety of cryptocurrencies to invest in, each with their own features as well as distinct pros and cons. In order to find out which is right for you, you’ll need to do a lot of research. 

The Currency of the Future? 

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Despite its disadvantages, crypto has the potential to become the most widely utilized currency in the world going forward. There are already a wide variety of ways in which you can use crypto without exchanging it for national currency. Many online marketplaces accept Bitcoin, Ethereum, and Litecoin already, and depending on where you live you may even manage to find a real estate agent or car dealership willing to conduct a real estate transaction using crypto

At the moment, there are still a lot of hurdles that need to be faced before cryptocurrencies can become universally accepted, but with time, likely, crypto will completely replace national currencies. Once we see global use of this technology, the benefits of a decentralized, highly secure and easily usable currency will be readily apparent. 

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  • Martin Poole

    I am certain there is a crypto bubble. The price of bitcoin is overpriced.

  • Tom Lloyd

    Great article

  • Sam Websdale

    It's a good point to buy now

  • Adam Hayes

    Hello I'm new to bitcoin and I've been making lot of losses but I see a lot of people earning.

  • Chris Lavery

    Crypto is a big deal !!

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Luke Fitzpatrick

Tech Expert

Luke Fitzpatrick has been published in Forbes, Yahoo! News and Influencive. He is also a guest lecturer at the University of Sydney, lecturing in Cross-Cultural Management and the Pre-MBA Program. You can connect with him on LinkedIn.

   

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