Why Use Cryptocurrency. Accept it Or Get left Behind
Cryptocurrencies are designed to protect and ultimately secure the exchange of currencies in a digital ecosystem. Instead of the conventional fiat currency like dollars, users do not need to depend on financial institutions such as banks for quick, safe, and secure transactions
Some think crypto is the buzz of the future while some others have ultimately dismissed it as a mere online trend.
Regardless of where you stand, there is no denying that crypto and Blockchain will have a place in the future with giant companies like J.P. Morgan, IBM, and Facebook trying to make their mark on the space.
However, there is still the burning question of “why people use cryptocurrency?”
Let’s take a brief look at that.
Both credit and bank institutions, and even retailers and service providers acquire, retain so much of the financial and personal data of their customers. Some of these details include:
- Social security numbers
- Net worth
- Credit score
- Account balance
- Transaction history, etc.
But that’s not all. They also have access to the things we do and purchase, and those we associate with.
With these monetary institutions and the traditional fiat currency, our privacy can no longer be preserved.
Our data has become one of the profitable assets for many if not all these major corporations.
With cryptocurrency transactions, there is no need to share so much of our details and transaction history.
This is all made possible using a cryptocurrency wallet address.
The virtual currency payment processor, which takes on the role of an intermediary, will commonly demand the name, as well as a shipping address for any delivery.
But the exciting thing is that every other data point will stay private as long as they are not linked to the user’s credit card or bank account.
Plus, transactions are also done strictly in altcoins and Bitcoins.
What Is Cryptocurrency?
Cryptocurrency is a digital currency that utilizes codes to produce digital money and validate transactions. These transactions are joined to an open ledger that is known as a blockchain. And, new coins are built and distributed via a process known as mining.
If you are not familiar with the mining and what it actually does we created an article to help you understand mining called, What is Bitcoin Mining Actually Doing| The Heart Of Decentralization.
Instead of carrying around physical currency, cryptocurrency is a digital asset that can easily be exchanged and used as a store of value, to purchase goods and services as well as secure peer to peer transactions.
The “crypto” aspect emanates from the utilization of cryptography for protection and validation in all transactions throughout the ecosystem.
They can also avoid the high cost of using banks for transactions, which are also very slow to complete. Bank transactions take days to complete, whereas crypto transactions can be completed in seconds and with minimal fees.
For newcomers to the space we also created a Crypto Terminology Glossary to help you understand all the important terms in crypto a-Z.
Cryptocurrency transactions are executed and finished through the Blockchain system. And, the first cryptocurrency that was introduced is known as the Bitcoin.
What Is The Purpose Of Cryptocurrency?
Cryptocurrency solves several significant issues that we currently face with our traditional banking systems.
The main area of concern is our security.
There is an unavoidable consequence in the centralized databases that are being held by quite a few influential organizations.
In the last couple of years, virtual currencies have been gaining attention from the public eye. This is because cryptocurrencies have some intriguing purposes in the world today.
Some of which include:
With the creation of virtual currencies, every validated transaction is kept in what is known as a public ledger. All the identities of coin owners are coded to make sure that record-keeping is legitimate.
Since the currency is highly decentralized, the users own it. The government or financial institutions have no control over it.
Cryptocurrency’s ledger makes sure that every transaction between the digital wallets can end up calculating an accurate balance.
Every transaction is checked to ensure that the crypto coins being used are owned by the person currently spending it. The public ledger is often referred to as the Blockchain.
With Blockchain technology, the validation of cryptocurrency transactions and smart contracts remain secure and accurate amongst the entire ecosystem. All of this makes the crypto un-hackable and devoid of fraudulent activities.
The security introduced by Blockchain technology has the opportunity to impact all the sectors of the world.
Blockchains ease of use adds to the purpose of why virtual currencies are growing in demand.
All that a user needs is a smart device and web connection. In no time, you are your very own bank and responsible for your crypto and transactions. Plus, you can also make money transfers immediately.
In the world today, we have more than two billion people who have direct access to the internet but do not have the chance to make use of the local exchange system.
Cryptocurrency gives all of these individuals an accessible alternative for sending and receiving currency almost instantly across the world.
Is Cryptocurrency A Good Investment?
This question is quite dicey because investing in virtual currencies can either be a good investment or a bad one. Investing in anything is risky, and crypto is no different.
With the market of cryptocurrency being volatile in its history, there is no definite yes or no answer about investing in cryptocurrency.
However, we can term them as suitable investments because they are secured cryptographically. Also, there are some applications they have, which are enticing.
Digital currencies can go further than being used for the mere exchange of goods. There are also smart contracts and DApps; decentralized applications that are among the fantastic applications of cryptocurrency.
Though the market is still very young and leaves a lot of upsides if you do your own research and pick the right projects, this makes even the most optimistic investors purchasing any of the popular cryptos an excellent choice but never a guarantee.
Furthermore, it does not matter if digital currencies get into a bubble because as if you are into the right projects and know when to get out of the market you can still get significant ROI’s on your investment.
There is a lot of talk about Bitcoin and cryptocurrencies being a bubble. There are opinions on both sides of the spectrum. We dove deeper into this topic discussing, Is Bitcoin a Bubble | A Look At Both Opinions, to help you decide if Bitcoin and crypto is a bubble and something you would want to invest into.
If you believe the current price is lower than the highest price it will be in the future then, it could make sense for crypto to be added to your portfolio as a long term.
Nonetheless, cryptocurrency can be risky for day traders. As a result of the volatility of the market, timing your buys and trades right, which is most commonly known as, buying low and selling high — an easy to understand approach but mastered by very few.
There is money in it to be made, but you should only invest what you can afford to lose as money is quickly lost as well.
Additionally, it is legal in the United States, although the regulation of crypto is still unclear.
These crypto trades are treated as capital gains. Until clear rules on regulation are set, be prepared for anything as the current market will not continue on the same path as these rules come into place.
Currently, all trades from one digital currency to another is a yearly taxable event.
Since all of this is far from the only considerations of tax, a person should research and determine the implications of tax on digital currencies before investing in the cryptos. So, an accountant will need to be hired to make sure you understand all the legalities in your jurisdiction.
Furthermore, the year 2017 saw a boom of ICOs plus newer coins. While it can be useful for the market, it also floods the market with coins of low quality, and this will result in awful experiences for new investors.
Also, it can as well draw so much heat from regulators. While it is legal and exciting in the US, it causes a lot of chaos due to the saturated market filled with products of low quality.
This is why STO’s were developed and will be the new standard for future crypto projects that will allow for a regulated, safer and more trusted solution. If you are not familiar with STO’s we break it all down for you in our article, What are STO’s | An In-Depth Look.
In spite of all the risks, decentralized virtual currencies with active functions, are likely to stay for a long time.
While there are lots of reasons to be extremely excited about digital currencies, there are also good reasons why you should be conservative when determining your strategy for investment.
Though you should never drop your entire savings on cryptocurrencies, you should also not be afraid to get started with little investments that you can comfortably lose.
When getting started in crypto, the primary consideration you should take before investing is using the right tools and platforms that provide safe and secure tractions, as well as protecting your identity. That is why we developed a small list of Battle-Tested Recommended Crypto Tools to help you get started on your journey into cryptocurrency.
Final thoughts On Why Use Cryptocurrency
The crypto-verse is a booming game-changer that can transform the way we carry out our daily activities. Some applications are being created to disrupt the status quo.
Ultimately, a decentralized network enables the masses to leverage all of their resources efficiently.
Cryptocurrencies are positioned to be the new way we transact in the future. It’s up to you whether you want to get started now or wait for the technology to advance, but it’s coming, and you should understand it all and be prepared either way.