Cryptocurrency: the Next Evolution in Finance
Bitcoin, and the cryptocurrency movement, evolved from the financial crisis of 2008 as an industry solution that could stand alone on its own, without an intermediary or governing authority. In the last 10 years, the crypto sector has gained popularity and mass appeal from its tremendous growth (especially in 2017). Despite all the headlines, there is still some mystery as to how cryptocurrency can benefit the global financial system, and what else exists beyond Bitcoin.
There are numerous advantages to crypto and an open ecosystem for currency, but the primary benefits are:
- Sole monetary control by the consumer due to a decentralized blockchain platform (containing immutable transaction records that create trust within the network), and individuals using storage wallets and privacy keys for security of their digital assets;
- True peer-to-peer transaction access with no need for an intermediary party (such as a bank or clearinghouse);
-Availability worldwide allowing consumers without access to banks (in communities with underserved or “unbanked”) to have a place to store their financial assets, and access to basic banking services such as savings or lending (depending on coin or exchange);
Numerous other digital tokens have been developed besides Bitcoin, with specific purposes and strengths in terms of long-term value (besides being a form of currency):
> Ethereum: an open source, blockchain platform that includes smart contracts functions, using its own token, Ether (ETH);
> Ripple: created a blockchain for institutions to process transfers (between two separate parties) in minutes instead of 3 - 5 business days, creating a more efficient and low cost alternative versus today’s wire transfers and clearinghouse, using ripples (XRP) as it’s currency;
> Stellar: has a similar open-source protocol and coin (XLM) for quick and efficient value exchange, with a focus on helping developing countries in Nigeria, Philippines, and India as an infrastructure for payments or microfinance transactions.
> Nano: provides the ability to also make transfers instantly without fees - - not using blockchain technology, but instead a directed acyclic graph (DAG) algorithm.
Regardless of your belief in cryptocurrency’s intrinsic or long-term value, the global impact has already been felt by government regulators, businesses, and consumers who are being given the option today to make purchases with crypto. The growing momentum behind this movement continues to depend on security (from hacking and other cyber attacks), regulation and compliance policies, and overall customer sentiment.
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Image Credit - CNBC