The financial world has seen its fair share of frenzies over the years, but none as influential as the introduction of cryptocurrencies. In this article we’re going to be taking a look at what digital currencies are and what we can expect to see from them in the future, after they become globally accepted and available.
The basics of cryptocurrency
In essence, cryptocurrencies are an entirely digital form of sending payment or storing cash. The original cryptocurrency was Bitcoin, and it shook the financial world to the core with bold new ideas about decentralization and anonymous payments.
Following the success of Bitcoin a multitude of other cryptocurrencies were created (aka “altcoins”, here’s how to buy them); some have gained enormous traction, others have fallen short. All of them, for the most part, have the same basic underpinnings.
They utilize something known as a ‘blockchain’ – this is basically a shared public record of transactions. These blockchains function in a variety of ways, some have more features, some have less. In general, though, they are very all similar in nature and function.
Here’s a basic rundown of how a transaction works, using Bitcoin as an example.
- Transaction is announced.
- Transaction is signed.
- A network of ‘miners’ validate the transaction.
- The transaction is verified.
- The transaction is combined with others to create a block of data in the blockchain.
- Now the transaction is visible and historically recorded.
While this is just a quick example of how the system works, it certainly showcases how easy and straightforward the process can be. It’s not something to be afraid of or to worry about not understanding. With that said, why should you even bother learning about cryptocurrencies if you’re not going to use them? Let’s take a look at the benefits of crypto usage, before moving on to what the future holds.
What are the benefits?
One of the main attractions when it comes to cryptocurrency is the theoretical infinite possibilities it presents, not to mention all of the benefits that come with these uses. Many articles have been written about the vast array of proposed uses for these innovative forms of currency and it’s easy to see why people are so excited about the future.
In practice, one might think that simple payment is the only use for cryptocurrencies, and perhaps the only one that will stand the test of time. This couldn’t be further from the truth, however, as payment is just one factor of the system; it’s just another avenue for customization and evolution in the blockchain. Many potential uses exist that can truly test digital currency, not just the fact that you can leave that bulky wallet at home (instead, Bitcoin wallets are used).
For example, traders, investors and crypto sports betting websites across the world have already begun to take advantage of the opportunities presented to them when applying their rigorous financial knowledge to cryptocurrency and the blockchain. Wealth management, investment, crypto betting games and active trading are all flourishing as subsections in the crypto-community. One only has to perform a simple search online to come across countless stories about people using cryptocurrency to make their millions.
Another overlooked benefit to using cryptocurrency is the protection from fraud and identity theft it can provide you with. When you give your credit card details to an online merchant you are giving them access to your full credit line. Digital currency eliminates this problem as they operate on a ‘push’ mechanism, meaning you choose exactly the amount to send. This is much safer than the ‘pull’ basis that credit cards work on, where the merchant or company you’re dealing with initiates the payment and withdraws the amount from your account.
What does the future look like with continued cryptocurrency usage?
So, now that you have a basic idea of how cryptocurrency works and what the benefits of using it are, it’s time for us to look to the future. We’re going to explore how continued usage of digital currency can affect the market, and what we can expect to see in the coming years and decades.
Increased competition and exponential forward movement
One of the main points to consider when people question how viable a crypto-friendly future looks is the sheer number of digital currencies now available; from Litecoin to Ethereum. Bitcoin is no longer the only big player in the market. Competition breeds evolution, which means we will probably see Bitcoin lower their fees and speed up transactions to stay ahead in the market.
The replacement of national currencies
Futurists have an interesting view on the usage of cryptocurrency in the coming years, with some even believing that an entirely digital payment era will soon be swooping in to replace a large majority of national currencies. This might seem like a strange prospect to some, but the benefits to such a system could potentially be enormous.
Mainstream wealth management
Although we’ve spoken a lot about using cryptocurrencies as a purely payment-centric system, the future holds an unparalleled level of potential for the economy. We may come to see trading and investing in Bitcoin as something a little bit like real estate. A completely mainstream form of managing ones wealth and investing wisely.
A massive influence in commerce
Because of how widespread cryptocurrencies are sure to become in the next few decades, it’ll come as no surprise that the world of commerce will be influenced immensely. Online retail is sure to grow and develop as more and more customers decide they want to pay in digital currency. Direct-to-consumer applications that link customers straight to their needs (like Uber and AirBNB) and sports betting websites that only use cryptocurrencies will also become more and more common, just check some crypto sport news and you will know that cryptocurrencies are the future in this industry.
The future certainly looks brighter if cryptocurrency usage continues to spike upwards. There is almost no knowing how widespread it could become, but with such a global acceptance towards Bitcoin (and other currencies) over just the past few years alone, it’d be safe to say that its here to stay.