Cryptocurrency is one of the most important inventions of our lifetimes, and yet, its power is still so misunderstood by the general public. As we enter a down cycle in the crypto markets, it is an opportunity to revisit the foundations of this industry and what makes it valuable.
Over the course of history, we have adopted a number of different forms of money: clay tablets, precious metals, and more recently, fiat (paper) currency. I believe that cryptocurrency stands to be the next evolution of money, as it has notable qualities that are unlike any other form of money that precedes it.
In recent years, far too much emphasis has been put on the speculative nature of cryptocurrency, and so many people are hungry for more information about its practical benefits. In a recent panel discussion I was a part of, one of the panellists remarked: “Why would my grandmother want to use crypto?” I have compiled a very simple, practical list of crypto benefits that everyone can understand.
Fast: Cryptocurrency transactions are simply much faster and have less barriers. Transactions often complete in minutes, if not seconds. The traditional banking system takes days to send international wires.
Cheap: Fewer parties in a transaction mean reduced costs, making the movement of money cheaper for everyone. The transaction is also purely digital, so transaction fees should continue to reduce over time.
Always available: Crypto does not sleep – it works 24/7/365. The traditional banking system only operates 9 AM-5 PM, five days a week.
Inclusive: Crypto has a low barrier to entry – you only need a mobile phone and an internet connection. Given that 84 percent of the world has a smartphone, crypto can help bring financial inclusion to those unbanked by the traditional financial system.
Global: You never need to be physically close to a person to pay them. You can pay them in the same way regardless of where they are in the world. Imagine being able to send money to your family in another country or pay for goods online, all without having to use a special service.
Transparent: Most crypto transactions are recorded on public blockchains that are visible to everyone. It is very easy to see the status of your transaction and when the money you are sending reaches the recipient.
Microtransactions: Any small businesses do not accept credit cards because they would lose too much money in fees when selling low-priced goods. Since crypto transactions are purely digital, their cost should approach zero. Crypto is able to support sub-fill transactions today, but in the future, we could see smaller transaction amounts than previously thought possible. Bitcoin is divisible up to eight decimal places.
Precise: You can always pay an exact amount and do not need to worry about change. This, along with lower fees, allows senders and receivers of money to know exactly how much money they are exchanging. International wires via the traditional banking system often cannot send exact amounts, as intermediary banks take a cut of the transaction.
Egalitarian: All participants in the cryptocurrency financial system are treated the same. Organisations that are part of new industries will be able to be banked, and your nationality, skin colour, or financial status will never again be a factor when acquiring banking services.
Resilient: Cryptocurrency is backed by the global economy. The global economy should remain more stable over the long term, as it will not be affected by the monetary policy or the local economy of a single nation. Cryptocurrency is also decentralised, so it is very difficult to change by a single party and immune to political motivations.
Similar to the manner in which the smartphone and internet were introduced in the 1990s to transform human convenience and capability, cryptocurrency is revolutionising the financial sector – for the better.
From simplifying transactions to equaling the playing field for individuals of all income brackets, the advantages that cryptocurrency provides in a decentralised financial system far outweigh that of the traditional system, while offering infinite possibilities; this trend will only continue as cryptocurrency becomes more accessible over time and technical hurdles are overcome.
With that said, those who are slow to adapt or refuse to invest in cryptocurrency and understand its intricacies will inevitably be left behind.
Joseph Dallago is the CEO and co-founder of Rain.
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