From stones to cowries, to precious metals, to paper money, then plastic money and now internet money.
This is the era of digital currencies as we know it. The time when paper money took the center stage is coming to an end. Even the so called plastic money issued by banks (credit cards) will soon be replaced by currencies with better technology and innovation. It is a transition, a revolution from what we used to know as bank issued currencies (FIAT) to internet money (virtual currencies). This doesn’t mean that FIAT will cease to exist, they will only become less important. This is a revolution that has come to stay and its technology has once again put power into the hands of ordinary people. The power to manage their own finances as they wish to. In this case we will refer to these virtual currencies as crypto-currencies.
What do we mean by crypto-currencies?
Crypto-currencies are simply applications of money on the internet or virtual currencies which are similar to the conventional currencies that we know but in this case is decentralized, which means no group, government, persons or entity has control over it. It is border less and secured. This is a solution to the problem of wealth distribution. We all know that the bank has been pretty unfair. They choose to give money (loans) to those who actually have much money in other to support their businesses. While it becomes very difficult for the ordinary persons to get same loans at a fair condition. But whatever the case maybe, we have the crypto-currency and that has come to stay. It is beyond the control of banks and the government. People can now have full control of their money without a trusted third party (financial institutions). People can now set up their wallet addresses (bank account) where they can receive and send payments. Why should you trust the bank to keep your money for you while you can do that at your own terms and conditions and have access to them and day, anytime? That’s something we should consider.
Apart from the ability of cryptocurrencies to bank the unbanked, and put financial powers into people’s hands, the technology on which cryptocurrencies are built upon is considered one of the greatest technological invention of all time that is going to completely change the world. It is called the “Blockchain”. Blockchain at its core is a peer-to-peer distributed ledger that is cryptographically secure, append-only, immutable (extremely hard to change), and updateable only via an agreement (consensus) among peers. The blockchain also contains all the transaction records ever made with a cryptocurrency. It is also responsible for the decentralized nature of cryptocurrencies. If you really understand this definition, you will be able to see the opportunities that this technology brings to us.
Several projects towards a decentralized world are been built on the blockchain. This makes life much easier for us as we can be able to access information we were denied in the first place. That’s the way the world is supposed to be. I’m not going into deep details about the technology, but it’s a good thing you know what it is about. For a more detailed post on how it can help you, help your business and keep you on top of your game, read this post.
This post is only intended to give an insight to the world of cryptocurrencies. You might think I forgot to talk about making money with cryptocurrencies. Cryptocurrencies are not primarily in existence to make you money. I understand that currencies like Bitcoin is proven to be a store of value and also security. But the essence of Bitcoin at its core is to encourage decentralization in our world and to eliminate third parties that make transactions more difficult and costlier, thus making transactions directly peer-peer, faster and secured. Making money with bitcoin is just a marketing aspect of the virtual currency, to facilitate wide adoption and mainstreaming
I believe with these few ideas, you can be able to see the advancement and improvements that cryptocurrencies come with and how its underlying technology can change the world for the better.