What will be the future of money? Imagine going to a restaurant and looking at your favorite digital meal menu combination. It is only shown as 009 BTC instead of the $ 8.99 price tag.
Can cryptography really be the future of money? The answer to this question is based on the general consensus on a number of key decisions ranging from ease of use to safety and regulations.
Let’s look at the two sides of the (digital) coin and compare and contrast traditional fiat money with cryptocurrency.
The first and foremost component is trust.
It is essential to trust the currency that people are using. What gives value to the dollar? Is it gold? No, the dollar has not protected gold since the 1970s. So what’s the value of a dollar (or any other fiat currency)? The currency of some countries is considered to be more stable than others. After all, it is the people’s confidence that the government’s issuance of this money remains firm and essentially guarantees its “value”.
How does trust work because it is decentralized to Bitcoin, which is not a governing body that issues coins? Bitcoin is located in the blockchain chain, basically an online accounting book that allows the whole world to see all transactions. Each of these transactions is verified by miners (people who use computers on the peer to peer network) to prevent fraud and to ensure that it is not double the cost. In exchange for services to maintain the integrity of the blockchain, miners receive a payment for each transaction they verify. Since there are so many miners trying to make money, each one checks their work to see the mistakes. This proof of the work process is why the blockchain has never been hacked. Basically, it is this trust that gives Bitcoin value.
Below, let’s look at the closest friend of trust, security.
What if my bank robs you or there is fraudulent activity on my credit card? The deposits I have in the bank are covered by FDIC insurance. It is likely that my bank will also cancel any card charges that I have never made. This is not to say that criminals are at least frustrating and do not perform stunts that require a lot of time. More or less, it is the peace of mind that comes from knowing that I will recover from any wrongdoing against me.
In crypto, there are many options when it comes to where to store your money. It is important to know that transactions are insured for your protection. There are reputable exchanges like Binance and Coinbase that have a proven track record of correcting mistakes for customers. Just as there are fewer reputable banks around the world, the same goes for cryptography.
What if I throw a twenty dollar bill in the fire? The same goes for crypto. If I lose my login credentials in a particular wallet or digital exchange, I will not be able to access those coins. Again, I can’t stress enough the importance of doing business with a reputable company.
The next issue is scaling. Today, this may be the biggest obstacle that prevents people from making more transactions in the blockchain. In terms of transaction speed, fiat money moves much faster than cryptography. Visa can handle about 40,000 transactions per second. Under normal circumstances, the blockchain can only handle about 10 seconds. However, a new protocol is being implemented that will increase the number of transactions by 60,000 per second. Known as the Lightning Network, cryptography can become the future of money.
The conversation would not be complete without talking about comfort. What do people like about traditional banking and spending methods? For those who prefer money, of course, it’s easy to use. If you are trying to book a hotel room or a rental car, you need a credit card. Personally, I use my credit card everywhere for convenience, security, and rewards.
Did you know that there are companies in the crypto space that provide all this? Monaco is issuing Visa logo cards that automatically convert your digital currency into your local currency.
If you’ve ever tried to wire money to someone, you know that this process can be very tedious and expensive. Blockchain transactions allow the user to send crypto to anyone in a matter of minutes, anywhere they live. It’s also considerably cheaper and more secure than sending a bank transfer.
There are other modern methods of transferring money in both worlds. Take, for example, apps like Zelle, Venmo, and Messenger Pay. These apps are used by millions of millennials every day. Did you know that cryptography is also in its infancy?
The Square Cash app now includes Bitcoin and CEO Jack Dorsey said: “Bitcoin, for us, is not about buying and selling. We believe it is a transformative technology for our industry, and we want to learn as soon as possible.”
He added, “Bitcoin allows more people to access the financial system.”
While it’s clear that fiat spending still dominates our way of moving money, the fledgling crypto system is fast gaining ground. Evidence is everywhere. Before 2017, it was difficult to find media coverage. Now almost all major business news covers Bitcoin. From Forbes to Fidelity, everyone is weighing in with their opinions.
What is my opinion? Perhaps the biggest reason Bitcoin can be successful is that it provides fair, inclusive, and financial access to more people around the world. Banks and large institutions see this as a threat to their existence. They are being lost at the end of the greatest transfer of wealth the world has ever seen.
Still undecided? Ask yourself this question: “Do people trust governments and banks more or less every day?”
The answer to this question may be what determines the future of money.