What is the purpose of cryptocurrency for you? I don't know the reasons of others, but for me, the main purpose of cryptocurrency is to be the money of the future. A money that we will use in our daily lives to pay for the things we need.
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Disclaimer: The information presented in this article is based on my personal understanding and knowledge acquired through past studies and research about cryptocurrencies. I would like to emphasize that I am not a cryptocurrency expert or a financial analyst with in-depth expertise in the workings of money. The views expressed here are solely my own and should not be considered as professional financial advice. It is always recommended to consult with qualified professionals or conduct thorough research before making any financial decisions related to cryptocurrencies or investments.
Why change the world's currency when we already have it and have been using it for a long time? You see, there are a lot of characteristics of cryptocurrency that make it good money, but I'll discuss that later.
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Although cryptocurrency is not yet ready to replace real-world money for now because of several valid reasons. I think if we want crypto to become our future money, we need to address the problems that hinder its potential. How can we make crypto our future money if we are not addressing its weaknesses? Failing to tackle the issues prevents it from becoming the money of the future.
So what are these weaknesses that make crypto a poor replacement for money?
Anonymity: One drawback of crypto, in my opinion, is its anonymity. Dishonest individuals can easily hide behind their wallet addresses, and tracking their location is challenging unless you possess exceptional blockchain expertise and devices.
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Volatility: Treating crypto as money is difficult at present unless it's a stablecoin. Consider this scenario: you save your money in crypto to purchase something worth $100, but before you can withdraw it, the market dips, and its value decreases to $75.
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I only hope that stable coins are backed by real-world assets like gold and silver and not merely by money that central banks can print at their discretion.
Why did I mention drifting away from its purpose? As I have observed, the cryptocurrency market has become more like an investment system, where people put their money in, withdraw it, and convert it back to real-world currency.
Isn't the purpose to make it real-world money to replace fiat? Then why aren't we addressing the issue so that we can use it as real money?
Unless crypto becomes more stable, rich people will just use it to get money from other people because they can manipulate it.
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If we can have a solution for cryptocurrency's volatility, people will see it as a good currency.
There are many characteristics of crypto that make it a good replacement for real-world money. The only problem I can think of that is voiding those characteristics are those two negative factors.
What are the good characteristics of a cryptocurrency?
Decentralization: The system is decentralized, meaning it can't be controlled by a central authority. The only thing that can be controlled is the development path through voting.
Transparency: All transactions are recorded and visible, although I hope that in the future, addresses will be personalized. What's the use of seeing all those transactions if you don't know who is engaging in malicious activities within the blockchain and laundering their money? Auditing can be easier and more reliable due to this characteristic.
Security: Hacking the blockchain is difficult unless you hand over your wallet's keys. Unlike traditional banks, you can't simply rob a wallet, so your money remains safe and secure.
Immutability: Recorded transactions on the blockchain are hard to change, enhancing transparency.
Accessibility: Not everyone can open a bank account due to balance requirements, but through cryptocurrency, people can save money.
Fast transactions: Crypto transactions are faster than conventional banking transactions. Firstly, peer-to-peer transactions eliminate the need to go through a bank's system. Secondly, if there is no bank branch in the recipient's country, traditional transactions may be delayed due to verifications, unlike crypto transactions.
Convenience: Depositing and digitizing your money doesn't require a visit to the bank. Additionally, you don't need to use ATMs for withdrawals.
I'm just being realistic about my thoughts on crypto. Currently, I don't believe that crypto is ready to replace cash yet. However, I genuinely appreciate its purpose. I hope that one day, a particular cryptocurrency will rise above all others, proving itself to be an excellent replacement for traditional money.