In the year 2021 cryptocurrency was able to capture the interests of most parties and this was the talk on every table. People view cryptocurrency as a form of trade to earn that extra income, but what fascinates about cryptocurrency is the impact it has made on our global financial ecosystem. Our traditional financial ecosystem mainly revolves around operations, procedures, and people. With crypto, a code can be used to replace all these aspects of the traditional financial systems. The advantage of it is that the code is automatic and instantaneous.
Cryptocurrency holds a very big opportunity in this ecosystem as it increases financial services and capital markets access, especially to the unbanked community. Cryptocurrency also decreases the costs of transactions. The crypto transactions are often at a lower cost and do not forget the speed and security that come with this form of currency. These factors make cryptocurrency a better and sound form of a store of value universally.
From time immemorial, several things have been used as a store of value such as silver, shells, stones, etc. But one thing that stood out amongst all these, was gold. Gold has persisted as a store of value for the longest time but cryptocurrency is now outdoing this precious resource.
Crypto brings in a big revolution on how the traditional financial platforms offered money and related financial investment products in the marketplaces, lending, central banks investing, and real estate contracts. There is already a big evolution in the ecosystem that involves cryptocurrency.
Crypto will change how the global financial ecosystem provides money and investment products across payments, marketplaces, central banking, custody, lending, investing, real estate contracts, as well as legal, audit, compliance, and security services. Here are a few examples of how the ecosystem is already evolving: Anchorage is the first national crypto bank (custodian bank); PayPal now offers crypto payments within its app and BlockCard offers a debit card (payments); Coinbase provides access to markets to buy, sell, and trade crypto (broker); BlockFi offers +7% to depositors by providing loans (debt and retail bank); Chainalysis analyzes crypto transactions on the Blockchain for security (compliance).
Crypto wallets have enhanced the security that cryptocurrencies offer. The unique information in the wallets helps to identify the owner who holds the units at a specific time has reduced cases of theft of units that are in store. Blockchain technology can identify any changes that go beyond asymmetric encryption and thus has helped to mitigate cases of data manipulation.
The private keys that are given to holders once they obtain the currency are the only thing that allows the holder to spend it or convert it. A holder without a key renders him/her useless. Another amazing feature of cryptocurrency that provides enhanced security is the “wallet.” The Wallets have unique information identifying the temporary owner of their units. Wallets reduce the risk of the theft of units that are being stored.
Cryptocurrencies’ source codes specify how many units exist in the market, leaving no room for fakes. To top it up, fraud protection is assured as once a transfer is completed, it can’t be undone.
A feature that has attracted both big and small business enterprises mostly the decentralization nature of cryptocurrencies. The virtual currency is not compliant with any specific organization or the government. The currency lacks ownership and no one can control it. Fear of assets and bank accounts being frozen because of political instability is a major factor, however, cryptocurrencies’ decentralized nature counteracts this, as currency is stored in different locations globally and can be retrieved at any given time of need. Cryptocurrencies thus offer a reliable medium for exchanging units that are outside the direct control of any Central Bank. Decentralization is particularly attractive to individuals who worry about quantitative easing and other loose monetary policies.
Cryptocurrency can transact up to 1,500 transactions per second. Payments are processed immediately as soon as the request is sent through and are also much cheaper. The security feature of cryptocurrency eliminates any need for a third-party processor to authenticate and verify. This, in turn, reduces the mandatory transaction fees. Although, some good third-party apps help people who need a little guidance or need some tool to take care of this part. But even then, the fees are usually 1 percent.
Cryptocurrencies are now gaining traction from commercial banks and the Central banks which are now developing their own Central Bank Digital Currencies (CBDCs) or looking into other cryptocurrency transactions from their clients.
Cryptocurrency markets are currently all over the place and there are several high-quality digital token and coin issuers like the World Causecoin (CAUSE), with excellent backers and management, with very good AML procedures in place, a great business model one might be interested in.
Blockchain the decentralized ledger technology within which cryptocurrencies and their digital tokens operate is very effective in the storage of data such as immigration information, medical records, insurance policies, and birth certificates.
The use of smart contracts technology based on the Blockchain such as Causechain — protocols will allow the self-execution of contracts once certain conditions are met — will certainly become headline news.
Cryptocurrency or virtual currencies have created a paradigm shift in the way we look at money. The way we look at potentially buying it. The way we look at potentially spending it.
