Cryptocurrencies are the center of attention these days, at least when it comes to how we will transact in the future.
But do they really deliver on their promise, and are Cryptocurrencies the future of money?
Cryptocurrencies can be the future of money since many companies are already investing in them, they are already being regulated, and they are faster, cheaper and more decentralized than traditional bank transfers.
On the other hand, Cryptocurrencies could fail since governments could hinder their growth and Cryptocurrencies don’t scale very well yet.
In this article, I am going to show you why Cryptocurrencies are likely to be the future of money, and why not!
Let’s get right into this article!
Why Cryptocurrencies can be the future of money
There are really 2 sides of this story: Why Cryptocurrencies are likely to become the future, and on the other side, why not.
First I will talk about all the advantages of Cryptocurrencies and why they will likely become the money of the future, and then I will mention some of its drawbacks.
The first reason why it is likely that Cryptocurrencies will be the tomorrow’s money because companies are already seeing their potential and investing in them.
One of the companies that started accepting Cryptocurrencies is Microsoft.
Now its users can buy online games and apps with Bitcoin, which is the largest Cryptocurrency.
Also PayPal is getting into Cryptocurrency, as it also allows its merchants to accept Bitcoin.
This is a step for Bitcoin, and Cryptocurrencies in general, since the more companies start accepting it, the faster they will get adopted by the people.
The second reason why Cryptocurrencies can get really mainstream in the next decades is because some Cryptocurrencies, like Ripple, for example, are already working hard to be integrated in the current financial system.
Banks and financial institutions also do not want to get left behind in this revolution, so they also plan on integrating Blockchain technology, and use the help of some Cryptocurrencies, like Ripple, to do that.
Also, Cryptocurrencies will most likely get regulated, which is, in my opinion, a double-edged sword, since on one hand, it makes Cryptocurrencies more legit and many investors will then feel safer to invest in Cryptocurrencies.
On the other hand, Cryptocurrency regulations could also mean, that innovation gets killed and that’s also a pretty sad scenario.
But if you want to learn more about regulations, and if Cryptocurrencies should get regulated, check out this complete guide on that topic.
Now you might say, but what are the real, fundamental alternatives of Cryptocurrencies?
And you are right, I have mostly talked about how other people and companies are already investing in them, but what about the fundamental technology of Cryptocurrencies themselves?
So, the first Cryptocurrency that was ever created is Bitcoin.
It was launched in 2009 by Satoshi Nakamoto, and to this day we still aren’t really sure who the actual person behind the pseudonym Satoshi Nakamoto really is.
What was so revolutionizing about Bitcoin was, that it allowed people to perform peer-to-peer transactions, without needing a centralized authority controlling and verifying all the transactions.
The way Bitcoin works is by having computers all around the world, also called miners, verify all the transactions on the Bitcoin network and together achieving consensus.
But what are some of the reasons people would want to switch from paying with normal money, like they always have, to performing transactions solely with their phone or computer?
Well, one of the reasons people have that can lead them to switch to transacting with Cryptocurrencies is that the transactions of Cryptocurrencies are way faster than traditional bank transfers.
Especially for business people, who are transacting lots of times between different countries, slow bank transfers can be, and are a real burden.
With Cryptocurrencies, it doesn’t matter where in the world you want to transact, since the internet doesn’t know country borders, nor does it care.
(except in China maybe)
So, transaction speed is a real advantage that Cryptocurrencies have over traditional bank transfers.
Another aspect that shows that Cryptocurrencies might be a better option than FIAT money, is that not only are Cryptocurrency transactions much faster than traditional bank transfers, but they are also much cheaper since the transactions fees of Cryptocurrencies are only a fraction of the ones attached to bank transfers, especially international bank transfers.
One feature that most Cryptocurrencies have, that isn’t present at all with all the normal FIAT money every day is control.
Cryptocurrencies like Bitcoin give control to the people, and take control away from the government, in regards to money.
See, the government can decide when it wants to print more money, and when it doesn’t want to.
For a stable world-economy to prosper, it is best to detach the currencies from the governments, and have a world currency, which functions perfectly without any political systems.
As already mentioned above, Bitcoin is run by independant and decentralized miners all over the world, which make sure the transactions on the Bitcoin network run smoothly.
But the miners do not only have the job of verifying all the transactions on the network.
They also create new Bitcoins. (and other Cryptocurrencies as well)
But unlike the FIAT money, where the government controls how much money is being printed, the creation of new Bitcoins (and most other Cryptocurrencies as well) is determined by mathematical functions.
In Bitcoin’s case, new Bitcoins are created approximately every 10 minutes, and when more miners join and more Bitcoins are being created, the mining difficulty simply increases and the creation of new Bitcoins is steady again.
I do not want to explain the whole Bitcoin mining process here, but if you are interested in learning more about Bitcoin mining, click here.
So, another reason why people would want to switch to Cryptocurrencies as their day-to-day currency is because they have control over their money, and then the currency will not suffer inflation above what is determined by the Cryptocurrency’s protocol.
The last possible benefit that I could think of, why Cryptocurrencies are likely to get adopted by a lot of people is anonymity.
Anonymity isn’t something that most of us value, considering that we voluntarily give tons of data to advertising companies like Google and Facebook.
But for the few people that value privacy and anonymity, (for whatever reason) normal bank transfers aren’t an option since they are all linked to our personal names and contact details.
But Cryptocurrencies are pseudo-anonymous.
On one hand, the wallets are publicly known, and everybody can look at the Bitcoin wallets publicly.
But while the wallets are public, they aren’t necessarily linked to the individuals who control the wallet and therefore Cryptocurrencies offer increased anonymity.
Why Cryptocurrencies cannot be the future of money
On the other hand, there are also countless arguments why Cryptocurrencies cannot be the future of money, and why they are doomed to fail.
One argument is, that the governments in the world will simply not allow Bitcoin or any other Cryptocurrency for that matter to take off, by just blocking and hindering it as much as possible.
Of course, a move like that will be pretty harsh, but let’s not underestimate what governments are willing to do to stay in power.
While they cannot shut down Bitcoin, or any other major Cryptocurrency directly, they sure can hinder its growth significantly.
How, you might ask?
They could simply make Cryptocurrencies illegal (which some countries in the world already do), and since most people do not want to do anything that is illegal and that could lead them to imprisonment, most people simply will not deal with Cryptocurrencies in such a scenario.
I do not think, or suggest that it will happen, but it sure is possible.
Another aspect while a Cryptocurrency like Bitcoin could never work is, that it consumes a ton of electricity during the mining process, which simply isn’t sustainable over a long period of time.
Also, right now Cryptocurrencies aren’t really scalable.
Bitcoin isn’t the fastest Cryptocurrency out there, but compared to companies like VISA, the number of transactions that Bitcoin can handle is laughable, compared to VISA.
Right now, Bitcoin can handle around 7 transactions per second, while VISA can handle around 24 thousand transactions per second.
While the Bitcoin community is working on technologies like the Lightning Network (learn more about it here) which will improve the transaction speed significantly, at the time of writing this article, the new innovative technologies to make Bitcoin transactions faster aren’t quite here yet.
So, scalability can sure be a problem for Cryptocurrencies, especially now, when we still haven’t got the proper technologies set in place for making Cryptocurrencies scale to the point that we need it if we want to replace FIAT money with Cryptocurrencies.
These are, in my opinion, the main arguments for and against the future of Cryptocurrencies, and whether Cryptocurrencies are going to prosper to fail.
While I think, Cryptocurrencies do offer a lot of value to the world, and that they are a technological achievement that is here to stay, we have to look at some of the drawbacks that could prevent it from growing in the future and replacing our FIAT money, that we are used to since we were little.
But now I would like to turn it over to you: Do you think Cryptocurrencies are here to stay and will only prosper in the future?
Or do you think they are a failed experiment and predestined to disappear?
Let me know your thoughts in the comments below, and I will get back to you as soon as possible.
Thanks for reading all the way to the end of this rather long article, and I wish you an awesome day!