There are two ways to answer the question “what is cryptocurrency.” The simple version goes like this: it’s a modern way to transfer value over the Internet without the need for an intermediary. The longer answer would go something like this: cryptocurrency is a cryptographically secure virtual protocol used for value transfers online. The protocol is based on decentralised ledger technology (DLT), which prevents parties from double-spending or counterfeiting. Though not all, the vast majority of cryptocurrencies are decentralized public networks of disparate computers (“nodes”) independent of any centralised monetary authority, which, at least in theory, renders them unsusceptible to any outside interference.
The Benefits of Cryptocurrency
With cryptocurrency, the transaction cost is low to nothing at all unlike, for example, the fee for transferring money from a digital wallet to a bank account. You can make transactions at any time of the day or night, and there are no limits on purchases and withdrawals. And anyone is free to use cryptocurrency, unlike setting up a bank account, which requires documentation and other paperwork.
International cryptocurrency transactions are faster than wire transfers too. Wire transfers take about half a day for the money to be moved from one place to another. With cryptocurrencies, transactions take only a matter of minutes or even seconds.
The Future of Cryptocurrency
The world is clearly divided when it comes to cryptocurrencies. On one side are supporters such as Bill Gates, Al Gore and Richard Branson, who say that cryptocurrencies are better than regular currencies. On the other side are people such as Warren Buffet, Paul Krugman, and Robert Shiller, who are against it. Krugman and Shiller, who are both Nobel Prize winners in the field of economics, call it a Ponzi scheme and a means for criminal activities.
In the future, there’s going to be a conflict between regulation and anonymity. Since several cryptocurrencies have been linked with terrorist attacks, governments would want to regulate how cryptocurrencies work. On the other hand, the main emphasis of cryptocurrencies is to ensure that users remain anonymous.
Futurists believe that by the year 2030, cryptocurrencies will occupy 25 per cent of national currencies, which means a significant chunk of the world would start believing in cryptocurrency as a mode of transaction. It’s going to be increasingly accepted by merchants and customers, and it will continue to have a volatile nature, which means prices will continue to fluctuate, as they have been doing for the past few years.