In many countries like the United States and China, cryptocurrency has come under fire. Various regulators want to prohibit or restrict the use of a variety of cryptocurrencies. But the truth is, as a society, we need cryptocurrency.
Cryptocurrency was created for the people by the people, and while some people do use that power to create scam coins, the cryptocurrency industry overall was created to protect the rights of people and further innovate society.
Read on to learn more about the reasons why the world needs cryptocurrency.
Why is Cryptocurrency Necessary?
Let us start by stating that cryptocurrency offers several potential benefits that proponents argue make it valuable to the world. These benefits are for all people, no matter what their origin or educational background. We have expanded on these below.
Cryptocurrencies are often built on blockchain technology, which enables decentralized networks. This means that no single entity, like a central bank or government, has complete control over the currency. This decentralization can potentially reduce the risk of manipulation or censorship by government entities.
As humans, the right to free speech and the right to do what we desire with our money should be a number one priority, but in recent years, this has fallen by the wayside. Especially in countries like the United States, where the gap between the rich and the poor only continues to grow while government entities line their pockets.
A decentralized currency like Bitcoin allows the population to have more control and choices over how they spend their money and where without the government being able to snatch it away or fine them based on what they consider improper use of currency.
Cryptocurrencies can provide financial services to individuals who don't have access to traditional banking systems. With just a smartphone and an internet connection, people in underserved regions can participate in the global economy, access remittances, and engage in peer-to-peer transactions.
In many developed countries (again, the United States), having a bank account isn’t a basic right. As a result, hundreds of people are turned away from financial institutions and left to bank on their own. This leaves them without access to digital money and unable to purchase a variety of goods and services.
Cryptocurrency is accessible to anyone, anywhere (in any country!). As long as you have access to cryptocurrency, you can use it, making it more fair and equal than government-sponsored banking.
Reduced Transaction Fees
Traditional financial systems can involve high transaction fees, especially for cross-border transactions. Cryptocurrency transactions can potentially be faster and less expensive, especially for international transfers.
Of course, this isn’t always true as certain currencies like Ethereum and Bitcoin tend to have higher fees, but overall, cryptocurrency fees for usage do tend to be less than traditional payment methods.
Security and Fraud Prevention
Blockchain technology, the underlying technology of most cryptocurrencies, offers enhanced security through its cryptographic features. Transactions are recorded in a tamper-resistant and transparent manner, reducing the risk of fraud.
Many will argue that there is fraud in the cryptocurrency world, and they aren’t wrong, however, fraud is common anywhere. Cryptocurrency has the potential to eliminate some common sources of fraud (such as voting) thanks to blockchain technology. Fiat cash cannot offer any form of security or fraud protection.
Some cryptocurrencies enable the creation of smart contracts, which are self-executing contracts with the terms directly written into code. These contracts can automate and streamline various processes, reducing the need for intermediaries and potentially increasing efficiency.
This also goes back to the banking inequality in the world. Many people have to rent a home for their entire life because of their inability to convince a bank to give them a mortgage. Cryptocurrency loans know no such discrimination, and anyone who has the proper collateral can attain a cryptocurrency loan thanks to a smart contract.
Protection Against Inflation
Some cryptocurrencies have a fixed supply, which means that they are not subject to inflation caused by central banks printing more money. This can be appealing in economies with hyperinflation or unstable monetary policies. Especially if the government continues to inflate a currency, you are forced to use in your everyday life.
Be careful, however, as not all cryptocurrencies are created equal, and they don’t all protect from inflation. Only cryptocurrencies that are deflationary, like Bitcoin, provide this service.
Certain cryptocurrencies offer enhanced privacy features, allowing users to make transactions with a higher degree of anonymity compared to traditional financial systems.
In our currency system, privacy with financial transactions is a thing of the past. If you want to use digital money and you use fiat, the government of the country you are in can track every transaction. Cash, can prevent this tracking, but it can also be cumbersome and is not allowed for some purchases.
Cryptocurrency combines convenience with privacy, allowing you to spend money digitally without needing to let other entities see where you are spending your money.
Related: The Bitcoin Privacy Problem
Innovation and Technology Development
The development of cryptocurrency and blockchain technology has led to various technological innovations beyond currency, including supply chain tracking, identity verification, and more.
Countries that choose to prohibit cryptocurrency subject themselves to something which is known as game theory. Sure, your government can choose not to innovate with cryptocurrency, but other governments are going to do so regardless. This means a variety of countries will innovate, leaving the others behind.
If your country prohibits cryptocurrency, you could find yourself at a technological disadvantage in the next few years, which can lower international opportunity and your ability to escape a country you aren’t happy in.
Despite these potential benefits, there are also challenges and concerns associated with cryptocurrencies, such as price volatility, regulatory issues, security risks, environmental impact (due to energy-intensive mining processes for certain cryptocurrencies), and potential use for illicit activities.
As a result, the necessity and long-term impact of cryptocurrency on the world are still subjects of ongoing debate and exploration. Here at MintDice we support the ongoing innovation in the cryptocurrency industry and aim to educate others about how cryptocurrency can benefit and even transform their lives.
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