The impact and importance of technology in the 21st century are unrivaled.
It is an industry that has grown rapidly over the years and influenced lifestyle, finance, education, medicine, innovation, and other industries in the world. Digital technologies are everywhere; you can see their influence in different areas such as streaming, social media, robotics, smartphones, digital television, and finance. Digital technologies have enhanced lives, strengthened economies, and made trade simple, easier and accessible.
The introduction of digital currencies has been at the center of this digital revolution. For a long time in human history, not so many people thought of the possibility of a global currency with uniform value everywhere. Interestingly, that’s what we have now, and from 2009 when the first coin was created, it’s been one level of advancement to another for the cryptocurrency market.
A cryptocurrency is a form of digital currency that can be bought, stored, and exchanged on platforms through a digital wallet. They are also called virtual currency as it is an electronic form of money; its access is restricted to digital phones and computers. Anyone can buy Litecoin or any other digital currency from their mobile device while on their beds. Buying, selling, saving, and other transactions can only be done online.
What Is Cryptocurrency?
A cryptocurrency is a digital form of money that uses cryptography to create and manage its currency, verify, and secure transactions in a network. Crypto spending is mostly an unregulated form of currency that can purchase goods and services and trade profits.
An important factor about crypto is its driving prices and the high volatility that accompanies these prices. Its value appreciates and depreciates quickly; it is volatile. Crypto uses blockchain, a decentralized technology, to manage and record transactions. There are over fifteen thousand cryptocurrencies in the market; the most popular, however, are Bitcoin and Ethereum.
Other currencies that have grown exponentially over the years include Dogecoin, Litecoin, USDT/Tether, to mention a few.
Impacts of Cryptocurrency on the World Economy
Cryptocurrency has helped improve the way people store, create, and transfer value. Some of the many ways cryptocurrency continues to impart the world include:
- Financial inclusion: the decision to invest in cryptocurrency is available to everyone and not limited or restricted to social class, gender, ethnicity, or race.
- Financial freedom: crypto allows users to trade money without the influence and extra cost of a brokerage like the traditional banks. Cryptocurrencies do not have any ties with juridical authorities such as the central banks that control the traditional banking system.
- It is an alternative to traditional means of money transactions. Because of its decentralized nature, users can easily transfer and receive money globally. Users can save money anywhere in the world without distance or banking-related restrictions.
- It is a career path for people with mathematical skills, which reduces unemployment. Trading and mining crypto is a career choice for people.
How Does Cryptocurrency Work?
To trade crypto like Bitcoin, Ethereum, or Litecoin, you need a digital wallet and an exchange account. Digital wallets are like online deposit boxes on an app that can store your crypto. You then create an account on an exchange platform app to transfer money to buy your cryptocurrencies. Popular trading exchange apps merge a wallet and an exchange account.
Benefits of Cryptocurrencies
- Cryptocurrencies are legit means of saving money. People perceive crypto as investment assets due to its ability to rise in value, although it generates no cash flow. To make a profit trading crypto, you have to sell it for a higher price than you bought from the cryptocurrency market.
- The cryptocurrency market is available to users round the clock since it is digital. Users do not have to visit physical banks to trade crypto and can be accessed through smartphones and computers.
- Cryptocurrency transactions are not regularized or conducted through central banks, which reduces transaction fees for money exchanged online.
- People can trade, travel and buy products using crypto.
- Cryptocurrency uses blockchain to process transactions that are more safe and secure than another payment system.
- Cryptocurrency is easily converted into cash. A user can buy Litecoin and convert it to cash without impacting the market price.
Future of Cryptocurrencies
The future of crypto largely depends on how people welcome it and use it. Crypto is not isolated; it has to be traded and used by humans. The reception of crypto as a digital currency is divided into two, the pro-crypto side, who welcome it and see it as a better alternative to traditional currency, and those against it who perceive it as difficult, unstable, and risky.
A major obstacle to the growth and expansion of crypto is government regulation and legalization. Crypto is projected to be the future. People are investing in it as its value increases.
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