What will the future of money look like? Imagine walking into a restaurant and looking at a digital menu board for your favorite combo meal. Only, instead of being priced at $8.99, it’s shown as 009 BTC.
Could crypto really be the future of money? The answer to that question depends on general consensus on several key decisions ranging from ease of use to security and regulation.
Let’s examine both sides of the (digital) coin and compare and contrast traditional fiat money with cryptocurrency.
The first and most important component is trust.
It is imperative that people trust the currency they use. What gives the dollar its value? Is it gold? No, the dollar has not been backed by gold since the 1970s. So what is it that gives the dollar (or any other fiat currency) value? Some countries’ currencies are considered more stable than others. After all, people trust that the government that issued that money stands firmly behind it and essentially guarantees its “value”.
How does trust work with Bitcoin since it is decentralized meaning their body is not a governing body that issues the coins? Bitcoin sits on a blockchain which is basically an online ledger that allows the whole world to see every transaction. Each of these transactions is verified by miners (people using computers on a peer-to-peer network) to prevent fraud and ensure there is no double spending. In exchange for their services in maintaining the integrity of the blockchain, miners receive payment for each transaction they verify. Since there are countless miners trying to make money, each of them checks each other for errors. This proof of work process is why the blockchain has never been hacked. Essentially, this trust is what gives Bitcoin its value.
Next, let’s look at trust’s closest friend, security.
How about if my bank is robbed or there is fraudulent activity on my credit card? My bank deposits are covered by FDIC insurance. Chances are my bank will also reverse any charges on my card that I never made. That doesn’t mean criminals won’t be able to pull off stunts that are frustrating and time-consuming to say the least. It is 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 many choices when it comes to where to store your money. It is essential to know if transactions are secured for your protection. There are reputable exchanges like Binance and Coinbase that have a proven track record of fixing bugs for their customers. Just as there are fewer reputable banks in the entire world, the same is true for cryptocurrencies.
What happens if I throw a twenty dollar bill into the fire? The same goes for cryptocurrencies. If I lose my login credentials to a particular digital wallet or exchange, then I won’t be able to access those coins. Again, I cannot stress enough the importance of doing business with a reputable company.
The next issue is scaling. Currently, this might be the biggest obstacle preventing people from conducting more transactions on the blockchain. When it comes to transaction speed, fiat money moves much faster than cryptocurrencies. Visa can process around 40,000 transactions per second. Under normal circumstances, the blockchain can only handle about 10 per second. However, a new protocol is being introduced that will increase this to 60,000 transactions per second. Known as the Lightning Network, it could result in cryptocurrencies becoming the future of money.
The conversation wouldn’t be complete without talking about the benefits. What do people tend to like about their traditional banking and spending methods? For those who prefer cash, it’s obviously easy to use most of the time. If you’re trying to book a hotel room or a rental car, then you need a credit card. I personally use my credit card everywhere I go for the convenience, security and rewards.
Did you know that there are companies that provide all this in the crypto space as well? Monaco now issues cards with the Visa logo that automatically convert your digital currency into local currency for you.
If you’ve ever tried to send money to someone, you know that the process can be very tedious and expensive. Blockchain transactions allow a user to send cryptocurrency to anyone in just minutes, regardless of where they live. It’s also significantly cheaper and safer than sending a bank transfer.
There are other modern methods of money transfer that exist in both worlds. Take apps like Zelle, Venmo, and Messenger Pay, for example. These apps are used by millions of millennials every day. Did you also know that they are starting to incorporate cryptocurrencies as well?
The Square Cash app now includes Bitcoin, with CEO Jack Dorsey saying, “Bitcoin doesn’t stop at buying and selling for us. We believe this is a transformational technology for our industry, and we want to learn as quickly as possible.”
He added: “Bitcoin offers an opportunity to give more people access to the financial system.”
While it’s clear that fiat spending still dominates the way most of us move money around, the new crypto system is quickly gaining ground. The evidence is everywhere. Before 2017, it was hard to find media coverage. Now almost every major business news story covers Bitcoin. From Forbes to Fidelity, they all weigh in with their opinions.
what is my opinion Perhaps the biggest reason why Bitcoin could succeed is that it is fair, inclusive and provides financial access to more people around the world. Banks and large institutions see this as a threat to their existence. They are on the losing end of the biggest wealth transfer the world has ever seen.
Still undecided? Ask yourself this question: “Do people trust governments and banks more or less every day?”
Your answer to that question may be what determines the future of money.