What will the future of money look like? Imagine walking into a restaurant and looking at a digital menu board of your favorite combined meal. Only, instead of costing $ 8.99, it is shown as 009 BTC.
Can cryptocurrency really be the future of money? The answer to this question depends on an overall consensus on several key decisions, from ease of use to safety 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 value? Is it gold? No, the dollar has not been backed by gold since the 1970s. What, then, is what gives value to the dollar (or any other fiat currency)? The currency of some countries is considered more stable than others. Ultimately, it is the people’s trust that the government that issues that money stands firmly behind it and essentially guarantees its “value”.
How does trust work with Bitcoin since it is decentralized, meaning that their body is not a governing body that issues coins? Bitcoin sits on a blockchain that is basically an online ledger that allows the whole world to see every transaction. Each of these transactions is checked by miners (people who work with computers on an equal footing) to prevent fraud and ensure there is no double spending. In exchange for their blockchain integrity maintenance services, miners receive payment for each transaction they verify. Since there are countless miners trying to make money, everyone checks to see if they are making mistakes. This workflow proof is why the blockchain was never hacked. Basically, this trust is what gives Bitcoin value.
Next, let’s look at the closest trust, security.
What do you say if my bank is robbed or there is a fraud on my credit card? My bank deposits are covered by FDIC insurance. It is very likely that my bank will cancel all debits from my card that I have never executed. This does not mean that criminals will not be able to report stunts that are frustrating and lengthy to say the least. It is more or less peace of mind that comes from knowing that I will most likely be healed of any injustice against me.
There are a lot of choices in the crypto system when it comes to where you will store your money. It is important to know if the transactions are insured for your protection. There are reputable exchanges such as Binance and Coinbase that have proven results in correcting injustices for their clients. Just as there are fewer than reputable banks in the whole world, the same is true for crypto.
What happens if I throw a twenty-dollar bill into the fire? The same goes for crypto. If I lose my credentials to sign up for a particular digital wallet or exchange, then I will not be able to have access to those coins. Again, I can’t stress enough the importance of doing business with a reputable company.
The next release is scaling. Currently, this is perhaps the biggest hurdle preventing people from conducting multiple transactions on the blockchain. In terms of transaction speed, fiat money moves much faster than crypto. Visa can process about 40,000 transactions per second. Under normal circumstances, a blockchain can only handle about 10 per second. However, a new protocol is being adopted that will increase up to 60,000 transactions per second. Known as the Lightning Network, it could result in the creation of the crypto future of the future of money.
The conversation would not be complete without a conversation about practicality. What do people usually like about their traditional methods of banking and spending? For those who prefer cash, it is obviously easy to use most of the time. If you are trying to book a hotel room or rent a car, you need a credit card. I personally use my credit card everywhere I go for convenience, security and rewards.
Did you know that there are companies out there that provide all of this in the crypto space as well? Monaco now issues Visa logo cards that automatically convert your digital currency into local currency.
If you have ever tried to wire money with someone, you know that this process can be very tedious and expensive. Blockchain transactions allow the user to send the crypto code to anyone in just a few minutes, no matter where they live. It is also significantly cheaper and safer than sending to a bank bank.
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 daily by millions of millennials. Did you also know that they are starting to include crypto?
The Square Cash app now includes Bitcoin, and CEO Jack Dorsey said, “Bitcoin doesn’t stop at us buying and selling. We believe this is a transformation technology for our industry and we want to learn as quickly as possible.”
He added, “Bitcoin offers an opportunity for more people to gain access to the financial system.”
While it is clear that fiat consumption still dominates the way most of us move money, the emerging crypto system is rapidly gaining ground. Evidence is everywhere. Prior to 2017, it was difficult to find media coverage. Now almost every big business news is covered by Bitcoin. From Forbes to Fidelity, they all weigh 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 very existence. They seem to be at a loss of the greatest wealth transfer the world has ever seen.
Still haven’t decided? Ask yourself this question: “Do people trust governments and banks more or less every day?”
Your answer to that question could be what determines the future of money.