Nowadays when people say “major financial revolution,” they are inevitably referring to cryptocurrency, blockchain technology and Bitcoin. These concepts have taken the world by surprise with their cutting-edge approach and multiple benefits, some of which include decentralized systems, saving money, no need for intermediaries and so on.
If you aren’t convinced, you should know that the market capital of cryptocurrencies was $185,182,008,333 at time of writing.
However, there are mixed feelings when it comes to online money: Mainstream media views it as dangerous and volatile, while its enthusiasts claim it is a force for good.
So, which is it?
In order to answer this question let’s dig deeper into the matter.
Cryptocurrencies are digital or virtual currencies that use cryptography for security. Cryptocurrencies live online and are not controlled by any company or government. They also have a higher monetary value than traditional currency: The price of Bitcoin has doubled in a month and is up 180% since the start of 2017 because of the surging demand for cryptocurrency.
The innovation behind most famous cryptocurrencies today is Bitcoin. Created in 2009, it is a worldwide digital payment system that transfers value as fast and as efficiently as data. The plus is that it is free from government interference and can be shared instantly online.
The underlying technology Bitcoin uses is blockchain, which is defined as: “a decentralized ledger that keeps a record of all transactions that take place across a peer-to-peer network. All online activities are organized into chunks of data named blocks, which are linked to one another forming a block chain. Through the use of miners that monitor, verify and record the transactions, every party involved in that business network can witness and access their log of transactions.” Yes, it’s pretty amazing.
Moving further, an upgrade to Bitcoin is Ethereum. Since it was launched in 2015, Ethereum has gained in both popularity and in financial worth. Unlike Bitcoin, it is actually a platform, showing tremendous potential because you can run apps on its network. It has its own digital currency, Ether, which supports smart contracts.
The Nomad Community is one example of a company that is playing it smart. It is based inside the Ethereum blockchain for the many benefits it brings. I spoke to the CEO, who shared that Ethereum incorporates “a decentralized digital public record of transactions that are secure, anonymous, tamper-proof and unchangeable.”
Why would anyone consider investing in cryptocurrencies?
The answer is: smart contracts, share trading, speed of financial transactions and safety.
Smart contracts: Smart contracts are a piece of code that facilitate the exchange of anything of value, including money, content, property and shares. Commercial transactions and agreements are conducted automatically without the need for a middleman, as the smart contract enforces the obligations of all involved parties.
Share trading: It won’t be long until share trading will be impacted by the new technology. Blockchain technology has the potential to enable greater trade accuracy and a shorter settlement process.
Speed of financial transactions: Transferring money has always been a long and expensive process, especially when it comes to cross-border payments. Blockchain technology not only makes the process faster and simpler — it also significantly lowers cost.
Safety: Blockchain is one of the most secure technologies that currently exists because it has defined financial rules and a clear process for verifying transactions. From healthcare giants to banks, most corporations are looking to implement this technology for safe use.
“The blockchain keeps everyone honest, and a whole layer of banking bureaucracy is removed, lowering costs,” says Paul Vigna in his book, “The Age of Cryptocurrency.” This combination of increased honesty and security, as well as lowered costs, is why we will continue to see cryptocurrency and blockchain technologies taking the world by storm.