Is Bitcoin the currency of the future? Is cryptocurrency the future?
These questions have been asked countless times by people who have been recently exposed to the digital currencies market. For those of us that have been here long enough, we know this to be true. Not with absolute certainty, but with a high probability.
Cryptocurrency is the future of the internet, or at least its next stage because it is inherently superior to the traditional financial system we use today.
For one, the financial sector is full of third-party services eating up unnecessary costs. Furthermore, these systems are quite exclusive in the sense that they have stringent requirements that the vast majority of the global population simply do not have access to. As a result, they find it extremely difficult to participate in digital commerce.
For this reason, developing nations care more about financial inclusion more than developed nations. What the latter cares more about is privacy, which is becoming more scarce in western countries; and even eastern countries. China, for instance, has implemented mass surveillance over its citizens.
These are some issues that crypto can and will fix one day. And did I mention that it cannot be stopped? How can crypto not be the future then if no one can prevent it?
Middlemen are unnecessary costs
This is one of the main selling points of crypto as stated in the Bitcoin whitepaper more than a decade ago. It was primarily designed for enabling online transactions without the need for third parties to oversee payments between users.
As everyone knows, third parties take a cut from every transaction that go through them. Yet, they are so engrained in the global landscape that we tend to think that they are essential for commerce.
Payments
Let’s talk about PayPal, Alipay, Visa, Mastercard, and other payment processors. Admittedly, they make online purchases and other payments so much easier.
But they do incur costs that add up to huge amounts if you do online payments regularly. Paypal charges $0.3 flat fee and 2.9% of the payment amount per transaction. That’s around $14 for a $500 payment.
And it doesn’t stop there. If you send a payment to someone from another country using a different currency, there is an extra 2.5% conversion fee. Don’t even get me started with withdrawal fees.
And wire transfers are even more expensive.
Everyone knows that cross-border payments are costly. Unless of course, if you pay with cryptocurrencies.
Cryptocurrency allows you to send and receive payments online at the fraction of the cost of what these third parties are charging. And its fees are flat, not percentage-based.
Bitcoin on-chain fees are currently below a dollar. But to be fair, it did spike to almost $50 during its peak period. That’s not likely to happen again because the lightning network can now scale a large volume of Bitcoin transactions, which allows fees to remain ultra-low.
Besides, there are many other cryptocurrencies with very low fees like Litecoin, and Bitcoin Cash. You could even use Tron and XRP that charge fractions of a penny.
Non-payments
Middlemen are not limited to payment processors. In fact far from it. The world is filled with them.
Some of them we call brokers. Others, we call platforms. And they come in all shapes and sizes. Let’s list a few of them.
- Business brokers
- Real Estate brokers
- Commodity brokers
- Insurance brokers
- Ride-hailing platforms
- Freelance platforms
- Travel agencies
- Online marketplaces
Obviously this list is not even close to 1 percent of the total number of non-payment intermediaries.
Let’s use freelance platforms as an example. Upwork takes a 20% cut from freelancers’ salary, which may decrease to 5% once they’ve earned above $10,000 on the platform.
As if that isn’t enough, they also charge freelancers whenever they apply to jobs by requiring them to purchase Upwork Connects. They charge clients a 3% processing fee as well.
Blockchain-based alternatives like Ethlance and Blocklancer are already here, but they still have a lot of room for improvement. For starters, they require you to pay gas fees for just about any slight change you make in your profile. This is a major UX problem but nothing that can’t be fixed. Once they are optimized and made beginner-friendly, there is no reason to use Upwork or Fiverr anymore.
The same concept can be applied to other third-party platforms as well as brokers. Uber, Airbnb, booking.com, and many more are going away simply because they do not empower the consumers as much as these decentralized systems.
Vitalik Buterin said it best:
Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly.
Vitalik Buterin
Same analogy:
- Instead of taking away a landlord’s source of income, it takes away Airbnb
- Instead of taking away food deliverers’ jobs, it takes away UberEats
Now I have nothing personal against brokers. And a lot of the people that work for these platforms are decent human beings. Furthermore, they do fill a gap in the market and are necessary in today’s business world.
That’s why I said “crypto is the future”, not the present. The consumers are not ready yet. For now, we are slowly transitioning into a world with fewer third parties necessary. Hopefully, these people will have other roles to play.
For now, they can do business as usual. But eventually, things will evolve.
This is why cryptocurrency is the future. It basically eliminates the need for all these extra costs.
Financial institutions keep failing
Unless you live in a cave, you are aware that you are taking part in traditional financial systems, whether directly or indirectly. Even if you don’t have a bank account, as long as you buy stuff with government-issued cash, you are part of it all.
Through our relationship with fiat money, we unwittingly give our trust central banks. And we hope and pray that they do not debase the currency we use in our daily lives. Yet they do.
We’ve seen it happen before, and we will see it happen again. What they call quantitative easing AKA printing more money to create more debt is an economic abomination. Yet it is common practice.
We let commercial banks hold our money electronically, and yet they loan it out in waves, only leaving a fraction of the money in reserve. This has caused a lot of economic bubbles throughout history.
21st Century Financial Crises
Let’s take a look at some of the worst recent economic screw-ups made by either governments, banks, or both. Take note that this list doesn’t include any Communist or Dictatorial governments. Most of these countries, at the very least, have democratic tendencies.
So I am being very conservative in my judgment. Even Venezuela, which is experiencing one of the most dreadful economic crises in history, is excluded since it has an authoritarian regime.
I’ve also excluded the Dot Com Bubble in 2001 because that was caused by market exuberance in the early internet space. It was the retail investors’ fault, not the banks and governments.
- Turkish economic crisis (Turkey) 2000–2001
- Early 2000s recession (European Union and United States) 2000
- Argentine Great Depression (Argentina) 1998–2002
- Icelandic financial crisis (Iceland) 2008-2011
- Great Financial Crisis (Global) 2007–2008 Prelude to Bitcoin release
- European debt crisis 2010
- Russian financial crisis (2014–2017)
- Greek government-debt crisis 2010-2018
- Turkish currency and debt crisis, 2018-present
It’s only been 20 years yet you have all these failures stacking up. And it’s far from over. Many economists predict that an economic recession is long overdue. And that it’s much worse than ever before.
How long are we going to trust the traditional financial system? Only crypto can end this. This is why cryptocurrency is the future.
It empowers the common people
Most crypto proponents believe that the technology’s greatest benefit to the world is to bank the unbanked and to serve the underserved. This means that it has more applications in developing countries than in developed countries, in this aspect.
Places like Bangladesh, Thailand, the Philippines, India, most countries in Africa, and many more. These nations need crypto the most.
Now how can crypto technology help?
- Financial Inclusion
- Reduction of international payment costs
- Combat corruption
All these solutions apply to almost every state in the world, although countries with more oppressive regimes will benefit the most.
Financial Inclusion
According to the World Bank, there are over 1.7 billion people who do not have access to a bank account. But that report has been criticized by Bitcoin proponent Andreas Antonopoulos for only counting the heads of households. Andreas also states that the real figure for unbanked individuals is around 6 billion.
If the truth is even remotely close to that number, then there is no doubt that cryptocurrency is the future.
As cryptocurrency will allow the vast majority of the world to participate in the global economy, no bank or financial institution can ever compete.
Reduction of international money transfer costs
Everyone who has sent money from one nation to another knows that it incurs high costs. It doesn’t matter if you use Paypal or bank transfer, you will pay a premium price. But not if you use cryptocurrencies.
If you pay with XRP, it will be as if you never paid any transaction fee at all, considering that it costs a fraction of a cent.
Now, the global remittance industry consists mostly of immigrants from developing countries that are working in developed countries and sending money to their families back home. Remittances totaled around $601 billion in the year 2015 alone.
And not only are the costs improved but the time and effort involved as well. Instead of taking three days, it would only take a few seconds or minutes. If we take scaling solutions like the lightning network into account, it would be near-instant.
How can crypto not be the future?
Combat corruption
Corruption is everywhere. It is a plague that takes many forms and with varying degrees. The most affected regions are those that lack economic democratization.
In developing countries, embezzlement of state funds by political leaders run amok. Citizens have little or no way of stopping government officials from filling their personal pockets from taxpayer money.
If we use a cryptocurrency ledger to allocate funds, then government expenditure will become transparent and prevent corrupt officials from exploiting tax money. But truth be told, this scenario is unlikely to happen due to governments’ greed and unwillingness to use any currency beyond their full control. Unless of course, if their currency depreciates excessively that they have no choice but to adopt a foreign currency.
A more realistic scenario would be utilizing open blockchains to run elections. This would make the voting process more fair and transparent, unlike traditional methods that are replete with discrepancies.
People care about privacy more than ever
There were days when we used to be more carefree while surfing online. But as of late, the digital world has become an insecure place for us. Particularly those from developed nations who have sensitive personal and financial information.
But that’s not all. The Facebook Cambridge Analytica data breach have opened our eyes to the risks of trusting social networks with our private information.
This is exacerbated by whistleblower Edward Snowden when he released highly classified information from the NSA, which revealed that the NSA and the Five Eyes Intelligence Alliance have been conducting a global surveillance spying on everybody.
Some privacy stats
But what do the consumers think of these? According to a study done by Kaspersky:
- 41% of consumers are more worried about their online privacy than their offline privacy
- 25% of consumers cover their webcams
- Cybercriminals are conceived as their number one privacy threat, followed by governments and the internet in general
And where does crypto fit into this? Well, the nature of cryptocurrency is encryption, which is a potent privacy tool. Developers of privacy coins like Monero are working hard to combat this.
If more people realized how much of their data are being exploited, they’d be wary. Nobody wants the world to share their personal information to the world. And this is not limited to financials only.
As our lives become more integrated with the internet, more private information are gonna be digitized. What you buy, where you go, who you talk to, what you’re doing. The possibilities are limitless.
Do you want everybody to know everything about you exactly? Of course not. You don’t need to have skeletons in your closet to want a bit of privacy in your life. It’s not that you have something to hide. But rather, you want only certain people to know certain aspects about you. They may be your close friends and family, but probably not some random guy in Pakistan.
Without encryption, hiding your personal data will be impossible as time goes by.
This is why privacy-focused coins like Dash and Zcash are so popular. They are the first step in preserving our right to transact privately. Monero takes this even further by building an overlay network that will hopefully provide total internet invisibility. The ultimate anti-NSA tool.
It is unstoppable
This is the primary reason why cryptocurrency is the future. After all, how can it not be if it cannot be stopped? Crypto is a force of nature that has no weakness.
They are extremely difficult to track
As mentioned above, privacy coins allow people to not only hide their transactions, but also every other information. We’ve seen this happen again and again. It doesn’t matter what governments and other regulatory bodies do.
They can crackdown on all crypto operations or outright ban the use of cryptocurrencies. Many have tried. None of them succeeded. People still continue to use cryptocurrencies despite nationwide bans. India gave in to crypto. Others will eventually do.
Ultimately, governments can never succeed in preventing crypto usage. The technology is becoming more powerful at cloaking user activities.
No company to shut down
Decentralized systems like cryptocurrencies function through a distributed computing network run by thousands to millions of computer devices. They have no central servers to shut down nor do they have any leaders to arrest.
With that in mind, there’s literally nothing anyone can do to stop a sufficiently decentralized cryptocurrency. This is our biggest strength as an industry.
Cryptocurrency is the future
Cryptocurrency is the future for all the right reasons. It isn’t perfect but its benefits far outweigh its detriments. As a crypto enthusiast, I make it my duty to focus on the good side of the technology and contribute as much as I can.
What about you?
If you’re invested in a particular cryptocurrency or crypto product, do something that would help it. Try to make it beyond the “buy this because it will go up” kind of support. Maybe you could accept a particular token in your small shop and share it on the internet.
It’s the little drops that ultimately ripple across the entire ocean.
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