What will the future of money look like? Imagine walking into a restaurant and looking at the digital menu board of your favorite combo meal. Only, instead of being priced at $ 8.99, it is listed as 009 BTC.
Can crypto really be the future of money? The answer to this question hinges on the general consensus on several key decisions ranging from ease of use to safety and regulation.
Let's take a look at both sides of the (digital) coin and compare and compare traditional fiat money with cryptocurrency.
The first and most important element is trust.
It is imperative that people have confidence in the currency they are using. What gives the dollar its value? Is it gold? No, the dollar has not been backed by gold since the 1970s. So what gives the dollar (or any other fiat currency) the value? The currency of some countries is considered to be more stable than others. Ultimately, it is the people's trust that the government issuing this money strongly supports it and essentially guarantees its "value".
How does trust work with Bitcoin since it is decentralized, which means there is not a governing body that issues the coins? Bitcoin sits on the blockchain, which is essentially an online accounting ledger that allows the whole world to see every transaction. Each of these transactions is verified by minors (people operating computers on a peer to peer network) to prevent fraud and ensure there is no double spending. In return for their services of maintaining the integrity of the blockchain, miners receive payment for every transaction they verify. Since there are countless miners out there trying to make money, each one checks the other's work for mistakes. This proof of work process is the reason the blockchain has never been hacked. Essentially, this trust is what gives Bitcoin value.
Next, let's look at the closest friend to trust, security.
What if my bank is stolen or there is fraudulent activity on my credit card? My deposits with the bank are covered by FDIC insurance. Chances are my bank will also waive my card charges which I never made. This doesn't mean that criminals won't be able to perform stunts that are frustrating and time consuming to say the least. It's more or less the peace of mind that comes from knowing that I will most likely be healed of any wrongdoing against me.
In crypto, there are a lot of choices when it comes to storing your money. It is imperative to know if the transactions are insured for your protection. There are reputable exchanges like Binance and Coinbase that have a proven track record of righting wrongs for their customers. Just as there are less than reputable banks all over the world, so too is crypto.
What happens if I throw a twenty dollar bill into a fire? The same is true for crypto. If I lose my login credentials to a certain digital wallet or exchange, I will not be able to access those coins. Again, I cannot stress enough the importance of doing business with a reputable company.
The next problem is the scaling. Currently, this could be the biggest obstacle preventing people from doing more transactions on the blockchain. When it comes to the speed of transactions, fiat money moves much faster than crypto. Visa can process approximately 40,000 transactions per second. Under normal circumstances, the blockchain can only handle around 10 per second. However, a new protocol is being enacted that will push that number up to 60,000 transactions per second. Known as the Lightning Network, this could make crypto the future of money.
The conversation wouldn't be complete without talking about convenience. What do people generally like about their traditional banking and spending methods? For those who prefer cash, this is obviously easy to use most of the time. If you are trying to book a hotel room or a rental car, you need a credit card. Personally, I use my credit card everywhere I go because of the convenience, security, and rewards.
Did you know that there are companies that also provide all of this in the crypto space? Monaco now issues Visa logo cards that automatically convert your digital currency to local currency for you.
If you've ever tried to transfer money to someone, you know this process can be very time consuming and expensive. Blockchain transactions allow a user to send cryptocurrency to anyone within minutes, regardless of where they live. It is also much cheaper and safer than sending a wire transfer.
There are other modern methods of money transfer that exist in both worlds. Take, for example, apps like Zelle, Venmo, and Messenger Pay. These apps are used by millions of millennials every day. Did you also know that they are also starting to integrate crypto?
The Square Cash app now includes Bitcoin and CEO Jack Dorsey said, “Bitcoin, for us, doesn't stop with buying and selling. We think it does. This is transformational technology for our industry and we want to learn as quickly as possible. "
He added: "Bitcoin offers an opportunity to allow more people to access the financial system."
While it's clear that fiat spending still dominates the way most of us transfer money, the brand new crypto system is quickly gaining ground. The evidence is everywhere. Prior to 2017, it was difficult to find mainstream media coverage. Now almost all of the major business media are covering Bitcoin. From Forbes to Fidelity, they all weigh in with their opinions.
What is my opinion? Perhaps the main reason Bitcoin could be successful is that it's fair, inclusive, and provides financial access to more people around the world. Banks and large institutions see it as a threat to their very existence. They risk losing the biggest transfer of wealth the world has ever seen.
Still undecided? Ask yourself this question: "Do people trust governments and banks more or less with each passing day?"
Your answer to this question just might be what determines the future of money.