Imagine you are playing a video game, a game you really love, but in order to get really good at the game there are certain weapons or resources you need to buy. It feels like in order to get joy from the game you need to invest into it like a job, and that feeling sucks. Now imagine you can make that money work for you. Imagine your game currency increases as your skill level does, and you can not only use that currency in the game but also in real life. That is exactly what cryptocurrency has the potential to be – a secure type of private digital payments that works independent of national governments.
The word cryptocurrency can be misleading, or at least the “currency” part of the word can be. It makes it too easy to compare it to fiat, or national currencies. The reason it has become such a hot topic in the news is because of its uses that go miles beyond traditional currencies. It can be used to secure payments, crowdsource funds, and even increase democracy. The overall utility is endless, but some of the basic ones are:
Security
Yes, with any kind of digital transaction fraud and scammers will exist. However, this also comes with the added benefit of not having to worry about a physical wallet. There are also certain precautions on the blockchain that make fraud harder. For example:
- Key/Seed Generation
- In order to access money you need to create keys and seeds that are confidential. This makes it incredibly difficult for scammers to impersonate you and take your assets.
- Encryption
- Accounts and digital wallets are encrypted which basically makes it hard to hack. It is like having a lock around your wallet and only your finger print can access it.
- The Blockchain
- The blockchain is a digital catalog that stores all of your transactions and assets. Every time you make a sale or buy something it is stored on the blockchain. This makes it easy to track your receipts and prove whether you made a purchase.
When it comes to security it is still somewhat on the individual person. You need to be diligent about keeping your passwords secure and making risky purchases. However, cryptocurrency has the potential to be way more secure than fiat. Just remember if your secret relative is actually a prince and wants to send you money, say no!
Transnational
One benefit of cryptocurrency being decentralized is that it is not governed by a single country. That means you could cross the American-Canadian border and not have to worry about the exchange rate, or how much Canadian Currency you will get for a $20 bill. One bitcoin in the USA is the same bitcoin in Canada. In college, one of the only annoying things about going abroad was figuring out how to use banks and not deal with international charges, with crypto that isn’t even a problem.
Crypto can also be used as a medium for international trade. The more legitimacy it gains the easier it will make for countries to trade, especially the poorer countries whose national currency is almost worthless compared to the Dollar or Euro. Basically, the more transnational crypto gets and the more legitimacy it gets, the cheaper it will be to travel – something almost nobody would oppose.
Crowdsourcing
A smaller yet incredibly exciting utility of crypto is that it increases the ability to crowdsource. Crowdsourcing is how entrepreneurs raise money for their ideas from large groups of people. Traditionally, creators need a few investors to make large investments, however crypto makes it much easier to get smaller donations from smaller investors (think kickstarter).
ICOs (Initial Coin Offerings) also give a physical incentive to investing. Through ICOs investors receive a unique crypto token in exchange for their investment. If the product does better the value of that token increases, and a feedback loop is created because further investment increases the product’s potential. Instead of having the potential to gain money the investor is more concerned with the value of the product. This is a lot easier of an investment to stomach for smaller investors.
Decentralization
Decentralization in blockchain technology ensures that significant points of weakness are exposed and worked on. These points could result in overall system failure. By tackling them, the number of weak points in the network is significantly reduced, encouraging better service and the general improvement of the system.
This increases accountability and makes it so points of weakness are exposed and worked on. If the system fails, people are not forced to use it, like they would with the dollar, so there is a large incentive to keep it secure and successful. It also ensures that distribution of resources is provided optimally because it ensures that people work hand-in-hand to maintain and improve the system.
The main thing this means to the average person though, is that anybody can get involved. If you are willing to put the work in you are more than capable of creating a currency or product on the blockchain. You can create a game and have your in-game currency have real world applications, or you create a currency to fund a music project or movie you want to make. The possibilities are endless and a decentralized form of money cuts a ton of red tape that would allow the general person to create and inspire.
Whether you notice it or not, crypto is affecting the economic and cultural world. Governments all around the world are trying to grapple and understand it. The benefits and overall utility of the new technology are endless, and what is available to us now needs to be looked at from the lens of an early adopter. What it does for us now will only multiply and when it gets down to the details the overall utility isn’t any personal independent function but the sole fact that it will lead the way to a new era of technological advancement.
