Since the invention of paper money, traditionalists have always had a consistent definition of what a currency is. Investopedia defines it as “a generally accepted form of money, including coins and paper notes, which is issued by a government and circulated within an economy. Used as a medium of exchange for goods and services, currency is the basis for trade.”
With the advent of cryptocurrencies, particularly the rise of Bitcoin and Ethereum, that definition is slowly being challenged. Cryptocurrencies are now being used for trade, albeit in a limited fashion. These advantages clearly help in its journey towards global acceptance:
Decentralization
Bitcoin launched at a time when public trust in the financial system was very low. The GreatRecession had just happened and the U.S. government was bailing out companies in the finance and automotive industries. Liberating the monetary system from this sort of manipulation was a major impetus for the foundation of Bitcoin. Decentralization is the feature that allows cryptocurrencies to operate freely of manipulation by those in control. Since a cryptocurrency is managed by nodes that are not easily manipulated, its integrity can remainintact.
Security
Since cryptocurrencies are validated using cryptography and stored in ledgers distributed throughout the blockchain network, it is incredibly secure against theft or loss. As long as you take steps to protect your wallet and are not careless, the security of cryptocurrency greatly exceeds that of fiat currency.
Speed
The digital nature of cryptocurrency and the absence of middlemen generally make the speed of cryptocurrency transactions much faster than fiat. Due to this fact, even financial institutions are considering using cryptocurrency as a tool for their own financial transactions.
Cost
Another benefit of “no middlemen” is that transactions are much cheaper than traditional fiat money transfers. Fees on the blockchain do exist and are vital to rewarding the miners who validate these transactions. But the fees are miniscule compared to the large fees charged by those who carry out transfers and exchanges in the traditional financial services industry.
What does it take to be a globally accepted Cryptocurrency?
Gone are the days when cryptocurrency was just regarded as a hacker’s experiment. Today, there are thousands of listed cryptocurrencies, based on different protocols, varying technological advances and different business strategies.
For a cryptocurrency to be a commercial initiative with a truly global scope, it has to be managed by a real company with real management. Without a stream of revenue and a team of suitably experienced senior executives to implement a well-considered development plan, success becomes a matter of luck.
Here are a few key factors that could make all the difference:
Distribution: A currency needs to be distributed. It needs to be global. If it’s not in the hands of a large number of people in many countries, then it can’t really fulfil its potential.
Usability: A currency needs to be accepted by third parties in exchange for goods and services, which is driven by distribution. If you have a million people holding your currency, then you’ll be able to find a large number of merchants who will be willing to accept your currency.
Convertibility: Merchants accepting the coins or people holding the coin looking for liquidity need to be able to convert those coins into other forms of value, be it a fiat currency or goods and services.
The Day Cryptocurrencies Rule
With the right people and strategies in place, there is no doubt that the goal of building a Crypto-Economy is not a matter of “if”. It’s only a matter of “when”. Rome was not built in a day, but they were laying the bricks every hour. This best describes the steady shift happening in the financial world today. Every day, the vision that cryptocurrencies will rule finance and commerce is becoming a reality.
RONNY TOME, CEO
Originally from Germany, Ronny has been a Bali resident since 1995. Here is where he founded and built a number of very successful businesses.
In 2014, he sold a villa in Bali for over US$700,000 worth of Bitcoins. It was the first real estate and largest Bitcoin transaction ever executed, and Ronny held the record for the next 18 months. His early experience on cryptocurrency and extensive experience as an entrepreneur and business innovator are what fuelled his drive to create and build the Ducatus Group of companies around the world.
Catch Ronny’s views on cryptocurrencies, blockchain, and more on his YouTube vlog Mondays with Ronny