Over the past few months, a new form of currency has been all the talk in the financial-technology sector. Yes, our current financial system is secure and allows for an “easy” transfer of funds from one entity to another, but couldn’t it be safer? Or quicker? Cryptocurrency, which is broadly defined as a digital asset currency in the form of “tokens” or “coins”, has made headlines worldwide for its secure, agile, and decentralized form of a distributed ledger (more explanation to follow). And with that, it is taking the world by storm…. fast.
Bitcoin. By now that term probably rings a bell, or at least sounds a little familiar. Over the past year Bitcoin’s price has risen 360%+, moving its price point from $3,800 to now nearing $50k, which partially explains why its name is so well known. Aside from the price jump however, Bitcoin was the first cryptocurrency actually used for purchasing material goods, and in more recent news Tesla just announced they are planning to accept Bitcoin payments for their electric vehicles, along with disclosing a $1.5B investment in the currency. Why is this a big deal you may wonder? Cryptocurrency has been repeatedly proven to be safer and more reliable than traditional currencies, partially because of its decentralized system and untraceable transaction processing. The rise of Bitcoin and other cryptos prove that digital currencies are a legitimate alternative to the financial system we currently know, and they’re also being supported by large, profitable organizations.
Although Bitcoin is kind of the “name stamp” of cryptocurrencies, there are far more uses for cryptocurrencies, each of which can serve an entirely different purpose. For example, cryptocurrencies like Hedera Hashgraph (HBAR) and Ethereum (ETH) allow other tokens called NFTs (non-fungible tokens: tokens that represent a wide range of tangible and intangible items, but cannot be directly exchanged with one another) to run on their platform, whereas Bitcoin is primarily used for P2P transactions and acts as a substitute for the “dollar”. Additionally, cryptocurrencies like the recently popularized “Dogecoin” can create payment systems that are “instant, fun, and free from traditional banking fees”, while simultaneously taking advantage of smart marketing techniques to help attract the younger generation (it’s not all about money…). These various coins prove that cryptocurrencies are versatile, and the possibilities are endless for what can be created. Ranging from sneaker authenticators to inter-blockchain liquidity protocols, NFTs and their respective platforms will soon introduce alternatives that we may have never considered possible.
Overall, there’s a lot to unpack with cryptocurrencies, and soon enough they may be introduced into our everyday lives. Its not certain that cryptocurrencies will be the “future of our financial system”, but their current stability and support implies that we will be seeing more of them in the near future.