Benefits of Cryptocurrency
How to explain Cryptocurrency?
In the beginning there was Bitcoin, invented in 2009 by a secretive developer and cult figure, Satoshi Nakamoto. No one knows the true name of Satoshi Nakamoto, but the structure laid by his invention of Bitcoin has paved the way for all other digital coinage.
Bitcoin has also led to increasing acceptance of cryptocurrencies as both an investment and as an alternative exchange currency, a means to securely transfer money from one currency owner to another, all in the digital space. This of course can be done without the use of traditional banks or financial institutions.
Cryptocurrencies are created to function as money, a complement or alternative to the fiat currencies of the world. As I am sure you are aware - many of which are in various stages of decline, whether by inflation or are at risk of government stability / spending risk. For example, take Greece, a country with a 45% income tax rate, who between 2009 and 2011 seized almost one thousand bank accounts per day. Or Venezuela who in 2016, entered hyperinflation. The inflation rate reached 274% in 2016, 863% in 2017, 130,060% in 2018, 282,973% in April 2019 and 4,679% in September 2019. The very survival of families in the country is under threat.
So, what are the advantages of Cryptocurrency
1. Confidentiality
Most cryptocurrencies are created with confidentiality in mind and not only hide the identity of the sender, but also the receiver of cryptocurrency funds. Only physical money & cash provides anything like similar anonymity.
2. Decentralisation
Cryptocurrency holders use a wallet to maintain their Cryptocurrency and to receive or send funds from a specific wallet address. This process uses an encrypted, secret key for access. The record of the currency exists on the blockchain with a copy stored on every full node, a computer that keeps a ledger locally and syncs with other computers online.
Therefore, your funds are not held inside a single bank, or even several. The decentralised nature of cryptocurrency ledgers makes cryptocurrencies less vulnerable to seizure or localised risks, like fires or hardware failures. The data isn’t just stored off-site or in the cloud, it’s copied worldwide to all full nodes.
3. Rarity
Bitcoin has a fixed supply. Over 17 million Bitcoin are in existence. However, only 21 million Bitcoin will ever exist. It’s built into the code for the currency. The fixed supply gives Bitcoin and other cryptocurrencies similar characteristics to gold, silver, or other precious metals that have historically been used as money.
Unlike U.S. Dollars, British Pounds or any other fiat currency, after the full supply is in circulation, the supply will never grow, devaluing the currency’s buying power.
4. Transfer Costs
The cost associated with cryptocurrency transfers is fast and inexpensive to transfer, leading to increased adoption of Crypto transactions and related technology by financial institutions. Has your bank advertised its use of blockchain yet? - sure it has.
Conclusion
The Crypto market is new and still in development. Risks stand alongside great potential rewards. If you’re new to cryptocurrencies, you may be better served by investing only risk capital and by building a portfolio of widely traded cryptocurrencies. Initial coin offerings can be tempting, particularly with the parabolic rises common to ICOs. Almost as common is a precipitous fall following the ICO.
It’s important to learn where a cryptocurrency can be traded and how big the market is for that cryptocurrency. Many early investors have found themselves without a viable way to exit the position. If cryptocurrencies are here to stay, some very good opportunities are likely to exist among the most commonly traded currencies, while also minimising risk due to abandoned projects or lack of liquidity.
Far from being a disruptive technology or even a scam, Cryptocurrencies represent humanity's best chance of financing a secure and positive future in a world beset by division, fear and inequality. 6 Degrees can help you secure a future in this emerging space.
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